Misappropriation is remarkably costly because it directly affects an organization’s bottom line, which means that to replenish lost income, substantially more revenue must be generated. For instance, if a company’s profit margin is 20%, it requires five times more revenue to replace the profits lost from fraud. Using this example, a $100K asset misappropriation scheme would necessitate that an additional $500K in revenue be created.
In the case of small businesses, however, even a large upswing in ensuing revenue may not reverse the extent of the damage. Employees that were laid off during tough times typically do not get their jobs back, and the opportunity cost of making financial decisions with lower-than-expected cash flows can never be entirely recouped. Some companies cannot recover from the downward trajectory that fraud precipitates, resulting in its untimely demise.
Misappropriation can occur at any stage of routine business operations:
Asset misappropriation during the purchase stage constitutes some of the most sophisticated fraud schemes that businesses encounter, making it the hardest to identify and prevent.
We are available to assist you quickly and help you identify and provide solutions for fraud issues in a timely and efficient manner. It is important to address issues of fraud as soon as it is suspected or to minimize your losses. We can also help you assess your vulnerability. Contact us here.
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