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If your company uses valuable equipment or other fixed assets in production, you may have already experienced asset loss due to theft.
Left unchecked, this can become a serious issue for your business, eating into your cash flow and bottom line. Not to mention, it can disrupt your workflow and decrease company morale.
So what can you do about it? That’s what we’re about to tackle.
In this guide, we dive deep into the problem of asset theft, explore the typical scope and different types of asset theft, and, most importantly, the steps you can take to minimize and prevent it in your business.
What is asset theft?
Asset theft is when a person (whether employee or unrelated to your organization) steals fixed assets — like equipment — or misuses liquid assets — like money or accounts receivable — for their own gain.
Essentially, someone steals something like a laptop or printer from the office or they steal liquid funds, cash from a safe, or funds from a company bank account.
What are the types of asset theft?
There are three main types of asset theft: employee theft of assets, asset theft by third parties, and the misappropriation of assets by employees.
The first two types of theft are what come to mind to most business owners: simple theft of physical goods or cash by employees or burglars. But there’s also a third significant case — employee fraud or misappropriation of assets — which can often be the most devastating for companies.
Employee theft of fixed assets or cash
The most straightforward case of employee asset theft is when an employee takes home a company laptop or printer.
If you have an asset management system, you may quickly notice the assets aren’t where they should be. But without the right security procedures, you may not have any good way of proving which employee stole the goods.
Employees can also steal cash. This is much more common in businesses where employees directly handle cash — like retail stores or restaurants. Cashier theft has long been a serious issue. Cash registers were first invented to battle it. It’s probably no surprise it came from a store with a spotty reputation — a saloon in Dayton, Ohio, in 1879. Saloons in 19th-century America weren’t exactly famous for their law-abiding clientele or staff.
Fixed asset or cash theft by third parties
Depending on your type of business and your office area, larger-scale third-party theft through breaking and entering may also be a problem.
If you have a retail business, you may also be concerned about the theft of cash by robbers. The risk level for this greatly depends on your industry, area, and specific location. To lower the risk, you can increase the frequency of deposits to ensure there’s a small amount of cash on hand at all times. This risk has also naturally grown smaller with the rising popularity of credit cards and other non-cash payment options.
Misappropriation of liquid assets — employee fraud
The last category is often categorized as employee fraud — when an employee figures out how to use a company’s system to get away with unearned funds or assets. One typical example is when a low-level manager funnels funds set aside for asset replacement.
Perhaps the worst and most publicized employee fraud case of all time is when a Yale employee managed to steal $40 million from Yale University in this way. The employee did this through “replacing” tech equipment like iPad Pros, laptops, and Microsoft Surfaces.
But instead of replacing equipment on schedule, the thief purchased and resold it at an absurd rate. Based on the damages and length of the criminal scheme, they kept the pace of 130+ iPad Pros per month for more than eight years.
She was only uncovered by an anonymous tip to the school administration.
In smaller companies, you may not be at risk of a scheme of similar proportions. However, this case demonstrates the need to properly oversee all company spending and procurement processes. Since nothing technically goes missing, a scheme can go on for years if you don’t catch it during an audit.
You also need to be vigilant with other expenses, like asset maintenance, to ensure that nothing untoward happens there.
How much does asset theft cost businesses?
According to ACFE (Association of Certified Fraud Examiners), companies worldwide lost $4.7 trillion to employee theft and occupational fraud in 2022.
Based on 2,110 fraud cases, the report estimates that, on average, employee theft costs companies around 5% of their annual revenue.
That means your risk of losses scales exponentially with the size of your business. But this isn’t the only factor in the cost of asset theft.
Other factors include:
- The number of expensive assets — like state-of-the-art IT equipment — your company possesses
- Whether the asset theft — for example, of manufacturing equipment — impairs your production process
- The proportional size of your budgets for procuring new assets
So, if you’re in an industry like transportation or landscaping, there’s an increased risk of serious losses due to theft.
For example, in the US, cargo theft was reported to be at a 10-year high in 2023, with over $44 million in losses. The average shipment loss was worth $260,703, which would significantly hit smaller companies.
Even if you’re not in a high-risk industry, you’re still at risk unless you put the right equipment and procedures in place.
How to reduce and prevent asset theft
Okay, now let’s deal with how to reduce and prevent theft at your company. First, you need to get a better handle on your assets — both liquid and fixed. Then, you need to improve your general security protocols. You also need to install the necessary equipment to implement them.
To do this, follow the detailed steps outlined below to keep your valuable assets safe.
Implement a robust asset tracking system
Your first line of defense against any theft of physical assets is to implement an asset tracking system. With bar codes and frequent (accurate and fast) asset inventories, you can easily keep track of all your assets.
If anything goes missing, you’ll notice immediately. In combination with other security precautions (covered later), you have a better chance of collecting evidence and getting the authorities on the right track.
A basic asset tracking system includes:
- Asset tags — barcode, RFID, or QR code
- Barcode scanners — potentially smartphones, but dedicated devices preferred for larger companies for faster and smoother asset inventories
- Barcode printers — to allow you to label existing and new assets effectively
- Asset management software — to give you a clear overview of all your assets at any given moment
With this in place, you can track everything from every asset’s supposed location to its maintenance history and immediately spot issues like early repurchasing. (Which we’ve covered can be one of the costliest long-term employee fraud schemes.)
You’ll also see several other benefits from asset management, like better asset maintenance planning, longer asset lifespans, and better sharing of assets across locations.
For more on the asset tracking procedure, read our dedicated guide on the topic.
For high-value equipment that’s easy to move around, you may want to invest in active RFID or IoT tracking that can set off alarms if it’s moved past certain boundaries.
Create concrete policies for replacing and tracking assets
To prevent the misappropriation of assets — like in the example of the Yale employee purchasing millions in iPad Pros for personal gain — make sure you have concrete policies for replacing assets in terms of timing and plenty of oversight.
Even with an asset tracking system in place, employees can exploit it without these policies in place. For example, you need to set specific goals for asset lifespan and repurchasing. Outline when you expect a repurchase for each asset type. For some equipment, this could be years or decades. For valuable consumables (things like printer ink), you also want to set certain usage benchmarks.
These policies are the safety net that helps you avoid employee fraud. And employee fraud is often a bigger issue than direct theft. If someone replaces a laptop after two years instead of three, they need a good reason.
In your policy, you should also have outlined a clear channel for disposing of old equipment. You are likely legally required to dispose of IT equipment in a certain way. Make sure to pick partners willing to report back exactly what they received.
This allows you to double-check that nothing fishy is happening at the end of the process.
As covered, the largest-scale cases of employee theft often take the form of fraud schemes like this, so you need to be vigilant.
Upgrade your security protocols
If you have experienced direct theft of assets, it’s time to upgrade your security protocols. (Of course, pre-emptive improvement is also a good idea.)
One idea is to install employee card scanners in storage rooms and warehouses. Then, you give all your employees ID cards with varying levels of access.
Basically, you want to ensure limited access to all areas with high-value equipment. You don’t want an intern to have full access to the server room or storage warehouse.
This will create a strong incentive against employee theft since you’d immediately have clear suspects. It will also function as a barrier against third-party theft of assets since they’d need to bypass the system.
This type of access control is equally important for digital assets and intellectual property. You need to closely control who has access to what. For example, you don’t want to give a freelance designer access to your whole media library. You can create a similar protocol for digital access control with a digital asset management system.
Of course, this isn’t the only security protocol you can implement. It’s just one of the lower-cost and lower-effort alternatives.
Invest in video surveillance
If the issue doesn’t occur during work hours, or it’s not easy to track who is accessing the assets, you could install video surveillance equipment like CCTV.
Surveillance cameras have a two-fold effect on asset security:
- Their presence alone has a preventative effect on things like employee theft. Just installing CCTV reduces crime by 13% on average. And keep in mind most of these are installed in public places, where potential perps still feel anonymous. The lack of anonymity in an office or manufacturing plant will strengthen this preventative effect.
- Their presence will help you identify the perpetrators in the event of a theft. The reason is simple enough — you will have recordings of the theft.
However, you should be selective in where you choose to install security cameras. Not only because they are expensive, but too much surveillance can lower morale and even put you in danger of breaking labor laws.
Asset theft FAQs
To help you further understand the topic of asset theft, we’ve answered some of the most frequently asked questions on the web below.
What is the misappropriation of company assets?
Misappropriating company assets is another way to steal via theft or fraud. For example, an employee could use their access to a warehouse to take home printer ink. Or they could use the company’s accounts to purchase something for their own use.
In either case, the company’s assets have been misappropriated.
What is an example of misuse of assets?
Misuse is a milder term that typically doesn’t refer to theft or fraud but inappropriately uses company equipment for other purposes. A common example is when employees use the office printer to print out personal documents.
Another common example is when a staff member uses a company car outside of working hours. Unless they have clearance — like during lunch breaks on a field sales trip — this is misuse. The difference between misuse and misappropriation lies in the intent and severity.
Often, cases of misuse are caused by misunderstanding the guidelines for using company assets. You can fix the issue by clarifying your regulations and communicating them to all staff members. Make sure they understand that they should not use company assets for personal activities without express permission.
What action should be taken in case of asset loss?
The best course of action following an asset loss depends on the scope of it and who’s responsible. If it’s a minor incident and an employee does it, it’s probably better to solve the issue internally. After all, the employee could have simply forgotten to bring the asset back. If it may result from forgetfulness and not malice, it’s not worth involving the authorities.
However, you should contact the relevant authorities if the scope is large, thousands of dollars or more. Who you should contact is different depending on the type of theft or fraud. Remember to research the jurisdictions relevant in your country or state.
For theft by third parties, you should always contact the authorities. You don’t want to get mixed up in a potentially dangerous situation by doing your own investigation and confronting the thieves.
Implement asset tracking with RedBeam to reduce asset theft and loss
If you want to secure your physical assets, the first step is to get a real overview of them. It is not just to know where your assets are, how old they are, when they were purchased, and what they are worth.
Employees using funds for seemingly valid purposes can be the most devastating form of asset theft.
RedBeam’s asset tracking system will help you minimize these issues. With a full asset history, asset locations, and each asset’s value in a database, you can quickly identify deviations. If you want to see what this can look like for your company, sign up for our 30-day free trial today.
Partnering with renowned manufacturers and technology resellers in the asset tracking industry, such as Zebra Technologies, is a significant accomplishment for RedBeam.
Zebra's state-of-the-art technologies are integrated into our asset tracking technology package, fully compatible with RedBeam software. The Zebra warranty assures customers that their hardware investment is protected, and its advanced features significantly increase the speed and efficiency of asset tracking.
Our in-depth knowledge of Zebra products enables us to make tailored hardware recommendations based on your business needs and budget.
