The Business Owner's Guide to Preventing Theft & Fraud

Hello and welcome to the show. I'm making today's recording at home and it's a late night recording, so there will be some noise in the background. Now today on the podcast, we're going to look at how to prevent fraud in your business. I repeat, how to prevent fraud in your business. And the reason why is because on the radio show, not the podcast, on the radio show, I had a call, it was like maybe 3 weeks back, Faller from Abuja, who is in the plantain chips business.

And because of the stuff that we happened to be talking about at the time, you know, he was calling in just to give a testimony to show how you don't really need to start with big money like that when you're going into business. Because he and his wife, that's his business partner, they started their plantain chips business with about 19,000 naira in seed capital. And that was early on in the north, you know, 2000 and something.

And now a couple of year later, he didn't say the size of the business, but he did admit that staff overhead alone was about a million a month. So that's to show how the business had grown. So that was the main point he was calling and he was giving a testimony just to let people know that you don't have to start with millions. You can start with small and you can't begin to graduate, but that was like the spirit of the show.

Then he mentioned casual, that he had a sales manager or a store manager who happened to engage in some fraudulent activity activities and was able to defraud him of some money. But you know, that was not the main point of why he was calling. So even though that was just an aside, I thought about it that there are lots of people who are starting businesses today and your prayer is that the business will grow. But this is something that happens when the business grows,

eventually you get a team and you start building infrastructure beyond you. And when that happens, then of course, you know, there's some concerns that happened. There's some concerns that happened. Basically, there's some headache that will just normally come. And so for those of us who are, you know, of a certain age, do you remember PDD and what's his name again? PDD and Biggie. Yeah. More money, more problems. Yeah.

So you get more money, you get more problems. So now. So what is something that we pray for? And yeah. So that's it. So I last week on the radio show, I decided to bring this thing up again and then talk about how to prevent fraud in your business. Of course, you know, I try to soften the edge. Like I'm not trying to say stay small. I'm not trying to say don't grow. We're just trying to say like Puff Daddy and Biggie said, more money, more problems.

So what you do is you try and anticipate the problems. You try and put systems in place to take care of the problems so they can continue to grow this thing that you've started. So if you're like Fola, you know, you are your loving wife, you will start at something so you continue to grow the thing. But it's something that we all have to deal with eventually. And that is why systems, processes, protocols, safeguards, no matter what it is that we have to call it.

That's why we have them in business. So that's what we're looking at today. Now, the first thing that I mentioned was, OK, by the way, you know, I'm not in fraud prevention. So always talk to the relevant specialist. If I'm telling you anything and I'm coming at it from the angle of sales and business development, then you can take it as gospel. If I've said it, so it is. But for episodes like today, when I'm talking about something else that is in another man's backyard, you know, another man is a specialist, another woman is a specialist.

Well, cause all them, but sure, there are a couple of things that we can learn. So First off, confirm your suspicions discreetly. The reason why I'm saying so is because you know Nigeria, you know our temperament. The moment you figure out that your best friend, your brother, your cousin, you know, whoever I steal from you, you know, the the way the thing will just be doing. You want to go and shout and you know, tear out the whole house,

you know, But The thing is, whenever there's a problem, I actually need to try and figure out exactly what's going on. And how about the problem is before we know how to react. And The thing is, when you go out, confront the person like this, the person that has time to bury one or two things. And a perfect example of that was this Tyler Perry movie. I can't remember the name, but the guy was the sales manager there, a pharmaceutical sales manager.

And of course, the guy was dipping into inventory and selling some things on the side, you know, just to, you know, now you're used to live in a certain kind of lifestyle. So the guy you know, who was trying to represent now, so he was doing some backyard deals and then somebody went to go and tell the org out the company. And your guy was like, I know this our guy, he's been loyal now when we had no problem. Thank you for telling me.

Let me let me investigate. Let me see. So throughout the movie, your guy was looking for evidence, you know, checking records, all these kind of things. Then midway through, but this guy, I mean, throughout, maybe through the movie, the guy's conscience trying to trick the guy because his marriage was falling apart, all kinds of things. So he said that he will not be born again when I give his life to Christ. So just as I was getting ready to go and confess to Olga to say, look, I'm a new creature in Christ.

And Olga, this is what I've been doing now for the past 15 years. This is what I've been doing. That's when your guy called him to his Olga. There's something I'll tell you. Say no problem me today, something I want to ask you while I sit down. The guy now dropped the flyer on the desk. I said Oh yeah, he's playing yourself. And the guy confessed. I said, in fact, I'm even happy as you've shown because honestly to God, that was the thing that was on my mind.

I said let me come and tell you. So just like that, you need to go and do your investigation. Go and check finance records. Go and check bank records. Go and look at invoice, purchase order, check raw material, inventory, see how everything is tiling up so you can mash out your case before you go and confront the person. Then one way that you can do your investigation is when you get in in touch with customers directly.

Because like in for last case, that's how he found out, you know something happened so he now had to hit the road and as he was going and talking to customers, you know 1 customer said he will not have company account for last. Like what do you mean we don't have company account? We've always had company account, I've been paying to managers account. That's how he started discovering that stuff was going down. So from talking to customers,

that's how we usually find out about these things. But one of the ways you can go about is just to call customers once in a while and say customer, thank you for your business. You know, you're one of our best customers, but do want more exercise calling people around them or trying to update our records, are trying to verify payment receipts. So I hope you don't mind. Let's just talk for like 2 or 3 minutes. Let's just confirm one or two things.

So that's the scope. That's how you now start hearing that Kelechi say you should be paying to her account and then she will remit or this person say you should be doing like this, this person say you should be doing like that, or this person say he has been giving you a discount. That's how you start figuring out what's going on. So customer contact really important then to protect your business. That's one of the reasons why some businesses I know it can really, really be annoying,

especially in a well for me and we are finding annoying when you go to some places and I actually want to pay cash. But then the policy is no cash payment in this store is because the owner, the staff has done him strong team. So that's where they put that policy in place. No more cash. Everybody who is buying here, you must pay in card and corporate accounts only. Then they flashed the corporate account there with another sign that says do not pay except if you're paying into so, so, so and so account.

So all those sorts of things restricting the use of cash in your store or when dealing with customer. Everything was by transfer. You know, all that is just to minimize opportunities for fraud because of course is when people handle cash that they can do one or two things. You know, like you collect 5K in cash and you say let me just move 200 naira, you know, or you say let me just borrow 5K from this 20K when I'm boyant, I will now put that 5K back.

So you minimize opportunities for all these things to happen. Then I found some principles online like for for inventory management. One of them was like the two person rule and I've seen that in practice here in Abuja as well. So anytime inventory has to move, we have to collect something from the store, two people have to sign from it. You know, I've seen that in some businesses. So you go to the store manager, store manager will say no problem.

The thing is there store manager will sign somebody else that is authorizing whatever person will sign. So now two people have signed that you Kalechi went to the store to come and carry XYZ number of items. Some people will say, come on, what do you mean should be 3 People can collude. Yes, it's possible. But The thing is conspiracies are hard to maintain. The number of people that the number of people that you tell.

In fact, this is I can't remember who came up with that saying that saying, but the person said them the most successful conspiracy is the conspiracy of 1. So if it is just you that do conspiracy, you didn't tell anybody, then you're safe. If you die, you die with a secret, but the moment you stay involving one or two other people, it's hard to keep this thing on our apps. So that is what all these principles, all these simple rules, like the two personal rules, you know, they just make it harder to bury something.

So these are some principles involved in inventory management. Then of course it's good practice to consult a lawyer yours, you know what your options are also because sometimes when employers are saying employers, when employees go and do strong thing like this, sometimes they do some things that expose us to some legal risks outside. But if you talk to your lawyer, this is what I found out. This is what this guy has been doing.

You're liar. Now know how to advise you, OK, If you want action against the guy, we can't do it like this or this thing and this thing that the guy has been doing outside, it has opened you up to this and this liability. This how you protect yourself. So talking to your lawyer, not a bad idea then also, it's another reason why all this evidence is important up when I say confirm suspicions discreetly because now you have good evidence that when you're sucking this person,

you say get out you bastard and you know that you can sack the person. You know your full chest with full justification because you have proof because I've seen it even in Abuja where you suck somebody, you say that the person was fraudulent, the person will now go to court and say fraudulent. How the reason why exactly is because of this because of this and then a nasty legal batting battle ensues. So I've seen it in the banking sector in particular.

It's not as if I know the guy personal, personal, but when the bank's acting this is because of foul play and the guy say which can foul play. So the guy also countersued. I said I look normally able, dismissing me wrongfully, you will say if you're even owe me entitlements, like pay me my entitlements. So these are protect yourself when you go and do good investigation. If anything happens, you're able to go to the court and say me Lord, this guy's a bastard.

And this is the reason why me Lord, can I approach the bench and say I approach the bench, me Lord, check this file. You see everything there, bank record plus videotape plus everything plus written testimony of store manager, everything there, there. The guy's a bastard. So yeah, it's why some of these things are important. Then of course, let's see. OK. I also found some stuff on segregation of duties. So basically that just means that no single one person should carry 1 transaction from beginning to the end.

So in the beginning, when was Folla and his wife? Folli used to do everything, you know? So he and his wife, you know, prepare every every. But therefore lies. Wonder who? Get inside the car, drive around, was the customer. Drop this thing, drop that thing, you know, drop every every. Then when you start hiring some people, you know, especially since you trust some people, you let go of some activities and you know, sometimes you know,

you trust them. And I had the guy, he's my cousin now. He's from my village, you know, he's my personal or from the same church. And it's not a problem. They let the person handle everything. And that is where like the for the store manager now or the sales manager. That's how Margo Margo started to enter the picture. So you try and reduce any single employee having complete control over transactions from beginning all the way to the end like I've noticed in some pharmacies.

Although I'm wondering some pharmacies in Abuja I'm wanting isn't necessary, they're just giving us work because anyway, shall they have the reason? I've noticed in some Abuja pharmacies now, the person you go and talk to that will give the advice is separate. The person who will go and pick up the drug is separate. The person that you will pay to is separate and the person that will now issue your receipt is separate.

And for me, I think like man, that's unnecessary work now like come on, we're in the pharmacy. Like what's the big deal? We're all here in the open. But anyway, I guess these are some of the reasons, reasons why as a customer, I don't like it because it's giving us unnecessary work. It means I talk to this person, I move over and talk to another person, I move over and pay to another person and I move over and collect the receipt from another person.

I'm spending much more time, but I guess all these controls are in place to limit the opportunities for fraud. Then let's see what else? OK, that's segregation of duties. Let's see. OK, yeah. Separating sales from payment, separating payment from delivery and then all these sorts of things. Then reconciliation. So there's some businesses where I noticed, well, the first time I saw reconciliation at least in Abuja or some of the neighborhood shops in the old place where I used to live, I

noticed that every night, if they do not do reconciliation, I don't Reconciliation was manual as in paper plus barrel plus calculator. If they don't do reconciliation and if everything does not tally, they won't close up. So they might be closed to the public, but they did that reconciliation every single day. So reconciliation is a good idea. And for some businesses, reconciliation is separate. So the people who normally sell,

they come and sell and then they go. The people who are going to do reconciliation down is a different set of stuff. So you can also separate reconciliation. Then daily sales reconciliation will be good. Checking the sales record, checking bank deposits, you know, stuff like that. And then also found some good stuff on inventory management software that's not manual because inventory management, if you're going to do it manual,

can it can be, it can be quite sure it can take take a while. So for those of you who remember the podcast episode where we spoke about barcodes, Yeah, about the guy who called in who had started these family soap. Sorry, 1 moment. OK, I'm back. Sorry about that. Remember at the beginning I said that, you know, it's a late night episode and you know, everybody's home so OK where the kids are, but wife is awake. So actually wife was looking at looking for me and she said where are you?

As I'm making podcasts, you see you're making podcasts at this time of the night. So your age mates, is it podcast they're making? Well, are they inside the room with their wife? I said, OK, my dear, I'm sorry, I'm pushing money. That's why I'm making podcast because you know, I make podcasts, I promote myself. If I promote myself, I get more customers. She said OK and then she walked away. So anyway, now I'm back. Let me finish the podcast that episode and then let me go and answer husband duty.

Where was I now? Inventory management. So I was saying that episode now that guy that I say he wants to do soap, the family soap business and he called in asking about the packaging. Yeah, yeah, good. And then I did the research about the, you know, from a business and a branding point of view, you know, yeah, it's, it's it's necessary. And so it's good that you do. But then there also are statutory compliance issues.

So by law, certain kinds of products suppose get packaging and the things that are supposed to be on the packaging are determined by law as in NAFDAQ has already said you will get packaging and on your packaging it must clearly spell out this, this, this and that. So in that particular episode, I think that's the first time that I mentioned barcodes, product, product barcodes because I can't remember if NAFDAQ. No, NAFTA does not recommend you have barcodes.

You must have your product number and all of that. But I think having a product barcode is good for inventory management. You know, I can't remember, it's been a while since I did research on that on that particular episode. But if you have back roads barcodes on your products, then inventory management becomes a lot easier because you just take the thing and then you go to your computer and then you scan ping him. And of course when people are buying stuff they will scan,

scan the plantain pinging. So as you they ping they go now you know the computer, the database, everything done, they reconcile now. OK, we started off today, 1st of December, we 500 bags of chips and we ended closing tally at the end of the day was 20 bags of chips, meaning that 480 bags of chips were sold. So that is inventory management doing the digital using software. So also another reason why if you're involved in one of these businesses where you're selling products apart from creating packaging just for the branding side, you know, these are also some of the small benefits they create the packaging comply with NAV dark first of all, then you know also helps with inventory management at the end of the day.

So you won't take time because that neighborhood shop that I mentioned that I first noticed that the staff will do manual recall reconciling. I said that manual reconciliation will not be smarting because sometimes they'll close the shop. The shop supposed to close like around 7, I think. No, sorry, like around 8:00, but then 730 they'll stop allowing customers to come in. Now all the customers are inside and they'll come out.

They don't start doing manual reconciliation. But then once in a while, you know, you're feeling peckish, like, you know, you want to shop something you want, you just want to flex. So you go and buy, swear. And I now notice that it's 10:00. They're still doing reconciliation. So that reconciliation will be small. I mean, you can imagine you shop in the shop 6:30 in the morning. You know, I'll be doing reconciliation until 10:00 at night.

Like, man, that's mad. Like on top how much salary I refill for people who work in certain kinds of jobs. But if everything is computerized, at least the reconciliation should not be that hard. Then also saw some stuff about whistleblower policy, having an anonymous whistleblower policy. I saw some of that in the businesses in the UKI haven't seen that in Niger. I mean, if you've seen any business that has anonymous whistleblower policies, then please let me know.

You know, I give my phone number at the beginning and at the end of every episode. So just drop me a WhatsApp message, you know, give me the example so I can come back here on the podcast and say, oh, you know, so also said some Nigeria businesses do this and this is an example, then let's see what else. OK, there's some stuff about CCTV and things like that. So basically those are just some ideas about how to prevent fraud in your business.

So I'm not making today's episode just care anybody. It's just one of those things like Biggie said, more money, more problems. So we gas to anticipate the problems and make sure that we nip these things in the bud. But when Fola called in and when we were discussing, actually it was the progress that we're celebrating, the going forward that we're celebrating. That's some people when they were starting their business,

like the person who started the discussion actually was the lady who said she started her tiger nut business with I think it's 3000. Tiger Nut Juice started with 3K and she called in to say that she had crossed 1M in revenue. Now for some of you, you know, One M is nothing, it's chicken change. But you know, everybody starts from somewhere. So for the person who started with 3K to now look back and say, let me be this one M now it's actually progress.

So, so it's actually the going forward that was celebrating. So even though we have to plan for all these things, idiots that we meet in our business and our employees, which remember that ultimately, you know, is, is progress that we're aiming for. You know, we keep the eye on the ball, we're moving forward. And for the people who have progressed, who have made it in court, because nobody ever really makes it, you know,

there's always a room for progress. Like my radio producer likes to play this song, Dangote, Dangote, Dangote. Still, they find more money, you know, So even down with it is still looking for money. So, you know, I'm making progress small by small. So all these horror stories, yet they might happen, they might not happen. Either way, we protect ourselves. But we'll keep an eye on, on the ball, you know, progress as we're looking towards.

And we'll get there because there are people who did it. You start with 19 K and then you're on some double millionaire digits and then some other people. You start with 3K and then you're on some single million digits. And these things happen. And we'll get there too. So yeah, we'll try and anticipate the bad. We'll keep an eye out for the good, and you know that, God willing, we'll get there. Some hard work, some prayer and you know, like the Muslims say,

trust in Allah but tie your camera. So this is it. We're trusting in God mostly. We'll tie our camera, safeguard ourselves and we'll all make progress, God willing. So that's it and that's all for today. Remember, if you'd love to connect, then call, send me a text message or send me a WhatsApp message on 08064662140. So thanks for your time and attention. I'll catch you at the next episode. I finished my podcast in duty,

so let me go and answer the call of my wife. She probably wants us to watch, I don't know, Love Island or, or Desperate Housewives or something. Many TV shows that people make these days, man. Anyway, everyone have a good night. I'll catch you guys tomorrow.