Tradesmen, like outside salespersons and delivery personnel, work autonomously, creating opportunity because of the environment in which they work. Many of the opportunities presented to salespeople and driver also exist for tradespeople. However, there are more opportunities for fraud, alongside theft.
Tradesmen also develop loyal customers and these often become personal clients, either for small business projects on the side, or at the clients’ homes. These customers frequently refer the tradesmen to friends and family. While this may not impact directly on the tradesman’s employer, it can create conflict and/or lead to theft and fraud.
Concurrent with the risk to the employer, tradesmen also have been observed stealing from or defrauding the employer’s clients.
A common occurrence in the construction and repair sectors is “under the table” work.
Equipment & supplies theft, to client
Tradesmen use an abundance of supplies in their on-call projects. Sometimes, the parts they use are sold to the customer discretely, cash paid to the tradesperson. A parts log including the inventory in the truck each day and parts in and out, will deter some theft. Supplies are more difficult to detect. Drill bits, adhesives, cleaners, and myriad other supplies may be supplied to the client for cash.
Scoring (Low to High) 0-20
Equipment and supplies theft, to tradesman
As frequent as theft for the client, supplies, tools and parts are stolen for the tradesman’s personal use. One survey of construction trades found that up to 63% of those tradesmen performed work for others on the side, requiring parts, tools and supplies. The opportunity to help oneself to these items may be too tempting for many people.
Scoring (Low to High) 0-10
False timesheets
This practice is very common. Although there are industry guidelines for auto mechanics as to how long each vehicle repair should take, similar guides for various crafts are not nearly as precise, allowing the tradesman to pad his billed hours or claim erroneous work time. Providing general guidelines for the employee for each project and also requiring that the worker provide reasons why a specific task took longer than expected can reduce willfully erroneous billing. These timesheet discrepancies can be completed to the advantage of the employer, the client or the staff member.
Scoring (Low to High) 0-20
Collusion with client
When a tradesman develops a close relationship with a client, the client may request that extra work, or work at his residence be incorporated into the company billing. He often exchanges favours, goods, or cash for this deviance. One businessman owned a large hotel and hired a specific tradesman, under the employ of a service company, to do all the maintenance & repair work. We were hired by the employer of the tradesman, who saw suspected errors in billing. We discovered that the tradesman was working more than 70% of his time on the client’s home, using shop materials and billing the hours, which were under a general contract that was a flat-rate annual fee. The employee also was being paid “under the table” for additional work.
Scoring (Low to High) 0-10
Use of company vehicle
While many companies allow employees to use the company vehicle for personal use, this is a taxable benefit an should be recorded when filing taxes. Failure to do so means that the company would be held liable for taxes on that benefit if they were audited. At the same time, many employees use company vehicles without the owner’s knowledge. We observed this pattern often with city and municipal vehicles. Vehicle trackers can alleviate this issue.
Scoring (Low to High) 0-20
Theft of recovered supplies
With the practice of recycling, many recovered waste products that tradesmen swap out for new equipment or parts can be recycled for a fee. This includes copper, aluminum, car parts, steel, metals and other electronic components. This may offer a significant revenue stream. If the tradesman fails to return these items to the employer, he may be recycling them himself, often for significant amounts.
Scoring (Low to High) 0-10
Mileage claims
Where a tradesman uses his own vehicle, he may claim excessive amounts of mileage. By specifying the mileage paid per job, the employer can reduce this risk.
Scoring (Low to High) 0-20
Double records
We had a lumber and hardware client who conducted mystery shops on yard and order desk personnel. The most significant problem we detected was in the yard, where loaders operated autonomously. However, we found numerous order desk problems, as well, most involving collusion between contractor and order personnel.
The contractor had the order desk draw up invoices for goods that had a higher price per unit than the actual price. This allowed the contractor to obtain more merchandise than shown on the receipts, which he kept for his own side projects, splitting the illicit revenue with the order desk person.
In the yard, the loader would add a multitude of extra lumber for cash from the contractor.
The same order personnel also provided the contractor with blank orders, which the contractor submitted to his clients to prove purchase. While they were not official cash receipts, they were sufficient for the private customer.
There are numerous variations of double records that contractors use to thwart the legitimate system.
Scoring (Low to High) 0-10
Simple theft
This is the most common method of loss. Simply stealing tools and equipment from the employer via the loading doors when the tradesperson is loading his vehicle usually is not detected, even when cameras are installed.
Scoring (Low to High) 0-10