Lapping Law and Legal Definition

Lapping is an embezzlement technique in which an employee takes cash from one customer’s accounts receivable and covers it up by stealing cash from the next customer's payment to pay the first account, then a third customer’s payment is used to pay the first account and so on. Lapping can be easily done if the cash handling and cash recording duties are handled by the same employee. It is also called teeming and lading.

Lapping is a practice in which legitimate payments from creditors are used to cover up unauthorized withdrawals from the company's accounts. [Shear v. Seminara (In re PSI Indus.), 306 B.R. 377, 384-385 (Bankr. D. Fla. 2003)].