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Attention Contractors - Employee Dishonesty

Are Your Employees Taking Home More Than Just Work?
    By J. Mark Strange, Surety Advisors, LLC

    Even your most trusted employees can cause a loss. In fact it is those most trusted, long term employees that are the leading source of employee theft. A kickback arrangement between a foreman and subcontractor, bookkeepers manipulating credit card charges and general ledgers, warehouse materials mysteriously disappearing, customer accusations of missing valuables from jobsite; like any business contractors are vulnerable to employee dishonesty. Historically, almost 30% of all business failures involve some form of dishonesty or fraud.

    There are several coverage parts to these bonds. Many are optional:

    Fidelity - Covers loss of money, securities or other business property

    Forgery - Covers loss due to alteration of checks, credit cards

    Money & Securities - Covers loss by robbery or burglary on and off premises

    Computer Fraud - Covers loss to money, securities or other property through online or through the computer.

    While owners and contractors are aware of the risks associated with the construction business and secure protection against non-completion of contracts (bid, payment and performance bonds) and liability insurance, many do not consider protection from one of the greatest financial threats any business faces- employee crime. Many property insurance policies limit or exclude theft and burglary of money and securities.

    Some contractors can absorb financial loss caused by an embezzler but not without causing a serious hit to the businesses cash reserves and credit worthiness which in turn Affects bond capacity, and reputation. For most a serious employee theft can mean bankruptcy.

    Fidelity losses generally accumulate over a period of many months-sometimes years before discovery and can reach devastating proportions. Small businesses are not immune and need to take steps to protect cash and other assets.

    What can you do to prevent employee theft? Screen applicants carefully, watch for unexplained shortages or sudden drops in profit, original invoices and documents being replaced with photocopies, employees refusing to take or rationalizing from taking vacations or promotions, sudden changes in employee lifestyle, an overabundance of unrecognized phone calls, low employee morale, excessive voids, credits or damage claims, sudden unexplained calls from suppliers and subs not getting paid. No employee should control any transaction from beginning to end. Separate processes. Have your books audited by an independent CPA.

    Fidelity Bonds for contractors also known as Third Party Fidelity are surety bonds that not only cover you from employees stealing your money, tools or supplies, but provide bonding for your customerís business and personal possessions while your employees are on the premises.

    Most employee dishonesty bonds only cover the employerís business assets. Surety Advisors, LLC, a bonding agency located in Houston, Texas ( offers a Fidelity Bond specifically designed to provide protection to both contractorís business property and that of its customers while the employee is on the customerís premises.

    Itís a competitive advantage to have this protection if you can confidently say "Our Employees Are Bonded For Honesty On The Job". Many contractors use Fidelity bonds as a marketing tool. They make special mention of this bond in advertisements and proposals.

    The cost of this protection is very reasonable. Generally, the premium is determined by the number of employees and the amount of bond needed. To find out if your business qualifies contact Surety Advisors, LLC at a surety bond agency in Houston Texas specializing in the contract bonding needs of businesses.

Surety Advisors, LLC - All Articles
Surety Advisors, LLC - All Articles

IMPORTANT NOTE: While we specialize in Surety Bonds, this Website provides only a simplified description of bonds and is not a statement of contract. Wording may not apply in all states. For complete details of bonds and conditions, be sure to read the bond, including all endorsements, or riders, if applicable. Bonds CANNOT be bound, amended, or altered by leaving a message on, or relying upon, information in this Website or through E-Mail.
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