Why it reaches the accounts last
The person responsible for a process is usually the person who reconciles it. By the time a discrepancy surfaces in the monthly numbers, it has been explained and adjusted by someone with both the access and the motive to do so.
This is why proprietors tend to sense a problem for months before they can point at it. The margin is wrong, the stock does not feel right, a vendor relationship has become oddly rigid — but every individual document reconciles.
Pattern 1 — Procurement and vendor fraud
The most common pattern we see. A vendor is related to, or controlled by, someone inside the business. Invoices are raised in full and goods are short-supplied, or prices are set above market with the difference shared.
Signs: a vendor who resists being changed; purchases concentrated with one supplier despite available alternatives; a registered address that is residential or shared; a vendor incorporated shortly after an employee joined; and reluctance to allow anyone else to handle that relationship.
What establishes it: entity verification, directorship and related-party analysis, and physical inspection of the registered address. In a significant proportion of cases the address alone settles the question.
Pattern 2 — Inventory and dispatch
Goods leave against falsified or duplicated paperwork, or are under-recorded at inward. Usually requires two people — one in dispatch, one in records.
Signs: shrinkage concentrated in particular SKUs rather than spread; discrepancies that disappear when a specific person is on leave; gate records that do not reconcile with dispatch documents; and resistance to surprise physical counts.
What establishes it: independent observation of the physical inward-and-dispatch process, run without reference to internal paperwork, so the two can be compared.
Pattern 3 — Sales, cash and collections
Cash retained, discounts granted off the books, or collections delayed and used in between.
Signs: receivables ageing badly for one salesperson's accounts; customers who insist on dealing with one individual only; credit notes and discounts clustered; and customer complaints about payments that were made but not credited.
What establishes it: discreet customer verification — confirming directly what was paid, when and to whom — combined with background checks on the staff involved.
Pattern 4 — The parallel business
An employee runs a competing operation using the firm's customers, suppliers, designs or equipment. Frequently the most expensive pattern, because it transfers the business itself rather than cash.
Signs: customers lost to an unknown competitor offering suspiciously similar terms; an employee with unexplained means; reluctance to take leave; and supplier relationships that behave oddly.
What establishes it: directorship and shareholding searches, discreet observation, and verification of the competing entity and the people behind it.
How to investigate without tipping anyone off
Brief at proprietor or director level only. The most common source of a leak is internal, and briefing a manager who may be adjacent to the problem ends the enquiry before it starts.
Start outside the business. Entity verification, directorship searches and physical inspection of vendor addresses all happen without anyone inside knowing. In a large share of cases this external work alone identifies where to look, which turns a six-month problem into a three-week one.
Only then consider observation inside operations, with an agreed cover. And resist the urge to confront early — a confrontation before the pattern is documented usually ends with the evidence disappearing and a wrongful termination claim.
Talk it through before you commit to anything
If this guide leaves you unsure whether your situation needs an investigator, the quickest way to find out is a short call. It is free, and you will get a direct answer — including when the answer is that nothing should be commissioned.