Susan Gunn wrote an excellent article that appeared in the September 2007 issue of Dental Economics. Her title: “Embezzlement Wake-up Call.” You have to register to see the whole article, but the registration is free.
She surveyed dental practices and asked them about embezzlements. Then she analyzed the responses.
She found that the embezzler could be anyone: “assistants taking cash payments chairside, front office managers taking patient checks, spouses and family members taking from other family members, CPAs diverting funds, even the dentist!”
Losses ranged from $35 to $900,000. They averaged $104,585. But Gunn points out that the money loss was only part of the problem.
Discovery and recovery time ranged up to 360 hours of work. And then there is what Gunn calls the real cost: “destroyed trust, time spent in discovery and recovery, shattered relationships, lost patients and revenue, bad press, and last, but certainly not least, health issues resulting from the ongoing stress.”
What are the warning signs of embezzlement? They’re pretty standard and you’ve probably heard them before. Watch out for unchecked control of operations with no independent checks. The embezzlers also worked long hours and never took sick days or vacation.
What about prevention? Your accountant can help you put systems in place that will provide checks on the work of individuals who handle money. Remember that they only work if you implement them.
That’s part of a two-pronged prevention program. The other part is background and reference checking. Referring to the cost of embezzlement, Gunn says, this. “It takes much less time and money to perform background checks, call for references, and implement procedures than it does to recover from embezzlement.”
Don’t think this is just for dentists. If you have staff and they handle money you could be a victim. You can improve your odds with regular and thorough background checks and by putting systems in place to make embezzlement harder to do and easier to catch.