False billing frauds currently represent the largest dollar losses in small businesses. These phony disbursement schemes are more often than not perpetrated by accounting personnel or, surprisingly, by management.

Skimming is the next step up, a more complex way to steal often involving cohorts. It's not always employee against employer. In the good old days the Vegas casinos were legendary for skimming revenue off the top until the government taxing authorities stepped in with controls and a perpetual physical presence.

Employee dishonesty can turn a thriving cash transaction business into a leaky bucket at warp speed. Internal controls designed to discourage this kind of behavior are essential and hands on management on a day to day basis can stem this tide if the commitment is there.

The most common employee occupational frauds in small businesses are misappropriations of cash. Examples include check tampering, revenue skimming and fraudulent disbursements by fake invoicing, along with payroll schemes, billing scams and more. These frauds are grouped in three general classes:

The shaft of the arrow had been feathered with one of the eagle's own plumes. We often give our enemies the means of our own destruction. Aesop (620 BC - 560 BC), The Eagle and the Arrow

"The man who is admired for the ingenuity of his larceny is almost always rediscovering some earlier form of fraud. The basic forms are all known, have all been practiced. The manners of capitalism improve. The morals may not." — John Kenneth Galbraith, American Economist (1908-1977)