Do you think your business is too small to be a target for embezzlement? Small business workplaces are often like families, and it’s hard to accept the fact that one of your family members may be stealing from you. But according to a study by insurance company Hiscox, the majority (55%) of embezzlement takes place at companies with fewer than 100 employees.

Not only are small businesses disproportionately affected by embezzlement, but they also suffer disproportionately large costs from this crime in comparison to big companies with big bank accounts. The median loss for small businesses from an incident of embezzlement is more than $289,000. That’s a huge hit for a small business — one that your company may not survive.

Here’s what you need to know about embezzlement and how to protect your business.

Who’s the typical embezzler?

  • While 37% of the criminals work in finance or accounting, embezzlement can occur in any department of your business.
  • Embezzlement also occurs at all levels: Managers and executives are frequently involved in this crime.
  • Embezzlers are typically in their mid- to late 40s.
  • Women are slightly more likely to embezzle from their employers than men.
  • Embezzlers generally work alone.

How do they embezzle money?

The typical embezzlement doesn’t involve a big, one-time “heist.” Instead, embezzlers frequently embezzle small amounts of money over a period of several years. This helps them avoid detection.

Over time, however, those small amounts begin to add up. According to the survey, the median case of embezzlement that lasts five years costs a company $2.2 million, while the median case of embezzlement that lasts 10 years costs a company $5.4 million.

The most popular form of embezzlement is funds theft; it accounts for more than one-third of cases. In funds theft, embezzlers transfer their employers’ cash or deposits into a bank account that they control.

Check fraud, in which embezzlers forge or alter checks, is the second most common type of embezzlement, accounting for more than 22% of cases.

Embezzlers may also use vendor invoicing or false billing. This means either altering or fabricating invoices from real vendors. Some embezzlers even make up fake vendor companies, Invoice their employers and receive the payments.

Credit card fraud accounts for about 10% of cases; however, the majority of those who commit credit card fraud are managers. They defraud their employers by making personal purchases on the company credit card or issuing themselves unauthorized credit cards.

Other, less common forms of embezzlement include theft of property or merchandise, expense fraud, payroll fraud (“paying” fictitious employees and diverting the money to their own bank accounts) and loan fraud (taking out a loan in the company’s name and depositing the funds in their own accounts).

How can you prevent embezzlement in your business?

To help safeguard your business, Hiscox recommends setting up a system of checks and balances. It doesn’t have to be elaborate, but at minimum, more than one person should be involved in every financial transaction. This makes it harder for embezzlers to hide their theft. You, the business owner, should also review the company’s bank statements, credit card statements, and other records of financial transactions on a monthly basis.

Conduct background checks before hiring employees who will be involved with your company’s finances. But don’t assume all is well because an employee has passed a background check. Employees may work for a company for years before they start to steal. Hiscox advises keeping an eye out for employees who live lavish lifestyles that are out of proportion to their salaries. Sadly, you also need to keep an eye on that hard-working employee who never takes a day off or a vacation: They may be afraid to take time off for fear their unscrupulous activities will come to light in their absence.

What can you do if someone embezzles from your company?

As soon as you suspect embezzlement is taking place, start taking detailed notes and begin reviewing financial records to see if you can spot anything out of the ordinary. If you need to involve others in your investigation, limit it to one or two trusted employees who you know can keep it quiet.

If you do discover that embezzlement occurred, it’s important to talk to an attorney and report the crime to the authorities. Filing charges probably won’t help you to recover the money that was embezzled, but it will send a strong signal to other employees that you won’t tolerate fraudulent behavior.

Last, but not least, learn from the experience. Use the information you uncover in your investigation to change your company’s policies. This will help prevent anyone from stealing from your business ever again.