Quick answer
If you've found employee theft, secure your accounts, report it to police and your insurer, and get your accountant to work out the real loss, including any unpaid tax or super the theft concealed. Then fund the gap. Lenders can help a business recovering from internal fraud when the theft is explained, the controls have changed and trading is otherwise sound.
Key points
- Lock down bank, accounting and email access first, before you confront anyone.
- Report to police, and check whether your insurance covers employee dishonesty.
- Theft by a bookkeeper often hides unpaid BAS, PAYG withholding or super.
- Lenders mostly want three things: the real loss, the fix to your controls, and steady trading.
- Clean bank statements after the fix carry more weight than any explanation.
If you’ve discovered employee theft, lock down your accounts, report it to police and your insurer, and have your accountant work out the true loss, including any tax or super the theft was hiding. Then fund the gap. Lenders can and do help businesses recovering from internal fraud when the loss is explained, controls have changed and trading is sound.
It’s one of the worst discoveries an owner can make. The bookkeeper you trusted for six years has been paying themselves twice. The store manager has been voiding sales and pocketing cash. The office administrator set up a fake supplier and has been paying it every month. The shock is personal, but the damage is financial, and it’s often bigger than it first looks, because the person stealing was usually also the person keeping the records.
This guide walks through the first steps, how to find the real number, and how an emergency business loan can help the business get back on its feet.
What should you do first?
Order matters here, because evidence and access can disappear quickly.
- Secure access. Change passwords and remove the person’s access to bank accounts, accounting software, payroll, email and supplier portals. Check who else is an authorised user and remove anyone who shouldn’t be.
- Preserve records. Don’t delete emails or files. Export bank statements and accounting data as they stand today.
- Report it to police. Victoria Police, for example, advises reporting employee theft to police immediately, calling Triple Zero (000) if it’s happening now or someone is in danger, and otherwise reporting online or on 131 444. Other states have their own non-emergency lines.
- Notify your insurer. If you have employee dishonesty or fidelity cover, most policies have strict notification deadlines.
- Get advice on the employment side before taking action against the employee, so the process is handled properly.
- Call your accountant. You need an independent review of the books, not just a tally of what you’ve already found.
How do you work out the real loss?
The amount stolen is rarely the full story. When the person stealing also controlled the bookkeeping, they often had to hide the hole somewhere. Common places:
| Where the damage hides | How it shows up | Why it matters for funding |
|---|---|---|
| Unpaid BAS and GST | ATO account shows debt you didn’t know about | Interest compounds daily; may need a payment plan or payout |
| PAYG withholding not remitted | ATO debt in the activity statement account | Can create serious problems for company directors if left |
| Superannuation not paid | Staff complaints or clearing house records | Has to be caught up, and late super can attract extra charges |
| Supplier invoices paid to fake accounts | Real suppliers chasing overdue accounts | Supply can stop until arrears are cleared |
| Cash takings skimmed | Banked turnover lower than real sales | Past bank statements understate the business’s true income |
| Personal spending on business cards | Card debt higher than expected | Adds to the stack of debts to consolidate |
Your accountant’s job is to put a single, reliable number on all of this. That number is what you’ll fund, and it’s what a lender will want to understand. Once you have it, an enquiry takes about a minute and a real person can look at how to cover it.
Will a lender still help after internal fraud?
Yes, in many cases. Lenders see fraud as an event that happened to the business, not a sign of a bad business, provided three things are clear:
The loss is understood. A clear total, backed by your accountant’s work, rather than a rough guess that keeps growing.
The controls have changed. Lenders want to see that it can’t happen again. Two-person approval on payments, a different bookkeeper or external BAS agent, bank alerts to the owner’s phone, regular reconciliations reviewed by someone other than the person who prepares them.
Trading is otherwise sound. The underlying sales and margins hold up. Bank statements after the fix carry particular weight.
What often complicates things is the side effects: an ATO debt the theft concealed, a few late supplier payments, maybe a missed loan repayment while the owner was in shock. These are considered case by case, and being upfront about them makes a big difference. Our ATO tax debt loans and bad credit business loans pages explain how lenders typically view each.
How do you stop it happening again?
Lenders ask about controls because the same weaknesses that allowed the theft can allow it again. A few changes cover most of the risk in a small business:
- Separate the jobs. The person who enters supplier invoices shouldn’t also approve and pay them.
- Two sets of eyes on payments. Most business banking platforms let you require a second approver above a set amount.
- Owner alerts. Bank notifications to the owner’s phone for new payees and large transfers.
- Monthly review. The owner or an external accountant reconciles the bank, the ATO portal and the super clearing house every month.
- Check new suppliers. Confirm a new supplier’s bank details by phone, using a number you already hold, before the first payment.
Write these down in a short page and include it with your application. It turns a worrying story into evidence of a business that has learned from it.
Which funding fits the recovery?
Covering the cash hole and catching up suppliers. Unsecured or cash-flow lending, typically $5k to $500k, sized on turnover and bank statements. This works well when the loss is moderate and trading is steady. See our working capital loans page.
Clearing ATO and super debts the theft created. If the ATO balance is significant, paying it out and replacing it with one repayment can stop interest compounding. The ATO’s payment plans page notes that plan debts “continue to accrue GIC, which compounds daily”, and that you can pay a plan off at any time.
A larger loss, or several debts at once. Property-secured lending, $20k to $5m, can consolidate the ATO, suppliers and card debt into one facility. Our business debt refinance page explains how consolidations are put together.
Illustrative example: a medical practice and a long-serving practice manager
This is an illustrative example, not a real client. A two-doctor practice discovers its practice manager has been paying a fake supplier for three years. The owners lock down access, report it to police and engage their accountant, who finds the fake payments plus two quarters of unpaid PAYG withholding and some late super contributions that had been hidden in the books.
The total hole is about $160k. Trading is strong, and the doctors own their consulting rooms. They set up two-person payment approval, move bookkeeping to an external firm and get a written summary from the accountant. A lender provides a property-secured facility that pays out the ATO, clears the super shortfall and tops up working capital. The practice keeps every staff member paid on time, and the new controls give everyone peace of mind. Our medical centre finance page covers how lenders look at practices more generally.
When is a loan not the answer?
If the theft has left the business unable to meet its debts as they fall due, a loan may only delay a harder decision. The free Small Business Debt Helpline on 1800 413 828 offers confidential help from financial counsellors, including checking viability, dealing with creditors and emotional support. Talk to your accountant and, for a company, consider getting advice about directors’ obligations.
Recovering from fraud? Let’s rebuild from a solid footing
Being stolen from by someone on your own team stings for a long time. The practical antidote is a business that’s stable again, with the hole funded cleanly and the gaps closed.
The enquiry takes about 60 seconds, with no credit check when you first enquire. We won’t send your details to a pile of lenders, so you won’t be chased by people you’ve never spoken to. A real person reads what’s happened and calls you to work through the options. Please fill in the form accurately, including any ATO or super debt the theft created, so we can match the right option the first time.
Frequently asked questions
Can I get a business loan after being defrauded by an employee?
Often, yes. Lenders look at how the business trades, what the loss was and what's changed. A clear written explanation, a police report reference and evidence of new controls make the application easier to assess. Bad credit and ATO debt resulting from the theft are considered case by case.
What if the theft left an ATO debt I didn't know about?
Contact the ATO or your tax agent early. If you can't pay the full amount, the ATO may offer a payment plan, although interest continues to accrue. A business loan can sometimes pay the ATO out so you're dealing with one manageable repayment.
Should I report employee theft to police?
Police advise reporting employee theft promptly. In Victoria, for example, police say to call Triple Zero if it's happening now or someone is in danger, and otherwise to report online or call the Police Assistance Line on 131 444. Other states have similar non-emergency options.
Does insurance cover employee theft?
Some business insurance policies include employee dishonesty or fidelity cover, often as an optional extra. Check your policy wording and lodge a claim as soon as you can, as most policies have notification time limits.
How do I explain the theft to a lender?
Keep it factual and short: what happened, roughly how much was lost, when you found it, what you've done and how the controls have changed. Attach a police report reference and your accountant's summary if you have one.