When you’re the owner of a dental office, you want to believe that your employees are honest and that you can trust them. However, many dental practices fall prey to embezzlement. Dentists often do not know enough about how to use their practice management systems.Â
What is embezzlement?
Embezzlement is the theft or misappropriation of funds placed in one’s trust or belonging to one’s employer. Reports show that 50% of dentists will become victims of embezzlement at some point in their careers. According to Dentistry IQ, “Three in every five dentists will fall victim to embezzlement.” An ADA study reports that two-thirds of U.S Dental practices are victims of fraud, theft, and embezzlement.Â
A common form of embezzlement is taking cash. This can occur when the employee accepts cash as payment and then post a discount on the computer, but the employee keeps the cash—also called skimming. This is about 30% of embezzlement cases. Other frauds include overbuying supplies and returning, keeping the refund, and lying about hours worked. You’ll have the people who record extra hours on their timesheets and those who “hang out” when they’re done or poke around to waste time before clocking out.Â
Why do employees embezzle?
You’ve heard the saying, “desperate times call for desperate measures.” One motivation is that the employee is having financial challenges in their home. They are having difficulty paying household bills or for extras for their children. Sometimes the employee could suffer from a divorce, medical expenses, or addiction.Â
And then you have the occasionally greedy person. They think you’re not paying them enough and want a different lifestyle. They’re greedy. They figure the extra money can up their lifestyle. I’m confident you’ve read about people who embezzle and live a lavish lifestyle upgrading their homes, extravagant vacations, and even starting new businesses. They justify it by telling themselves they’re not paid enough. You’ll find those who like the thrill of trying to see how far they can push the limit and not get caught.Â
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Warning signs of embezzlement
A few things to look out for. Watch for employees who are the first to work and the last to leave. And don’t like to be supervised while they work. Sometimes these people don’t want to take time off because if someone else is “in the books,” they can find out.
If you notice a decline in your accounts receivable or collections.
If you’re an office that typically has many cash-paying patients and that suddenly stops. Â
Watch for cash flow challenges and if your office manager is the bill payer, pay attention to the incoming bills to ensure they’re paid on time. If you start noticing that some things are in disarray in your business, start doing some investigation.Â
Embezzlement can be a challenge for dentists. Be sure you have your checks and balances in place to do your best to prevent it. Pay close attention to changed behaviors, accounts receivables, and any lavish purchases or lifestyle changes.Â
