Can you be sure that you’re not the victim of fraudulent activity within your business? You can’t. How do you stop something you don’t see from happening? Well the first step is being aware that it could be happening.
- When investigating unusual activity do you receive irrational answers?
- Do you have excessive workload and duties amassed by a single employee?
- Do you have material costs inordinately high as a percentage of turnover?
- Doyou have managers insisting on performing junior staff roles?
- Have you had Important documents such as timesheets, z reads, or invoicing going missing?
Freud can either be internal or external, that is; undertaken by people within your organisation or by people outside and supporting your organisation. The most common areas I will cover today areyour bookkeeping, your materials and your point of sale. As we are all most likely to be familiar with customer theft I won’t cover this today.
Your bookkeeper is in a prime position to exploit their position and it’s for this reason they should never be placed in a position where they control
your transactions from start to finish.
They should be able to write the cheques but not sign them, and where possible I would suggest online banking to avoid cheques entirely which leave you exposed in a much greater way. Most banks offer facilities where your
bookkeeper can have varied levels of activity on your bank account. This should most definitely be considered.
The greatest error you can make with your bookkeeper is allowing them to create an invoice receive it and bank it. Being in control of every step in the monies receivable process leaves you very exposed. Consider your bookkeeper not being allowed to create invoices this duty
can rest with either yourself or your manager. Accounting programmes like MYOB can limit user activity also.
Ensure your bookkeeper takes leave at least once a year. This will allow you a period where someone else can be trained and can perform these duties and audit for any unusual discrepancies.
Sit with your bookkeeper regularly and analyse your aged payables and receivables, profit and loss reports and balance sheets. As a business owner you need to be very familiar with who you’re paying and who you’re receiving money from.
Stock going missing can be very easily missed especially if staff are colluding and you spend little time in your kitchen or storerooms.
One of the best ways of establishing if stock is not being delivered or pilfered is regular stocktaking procedures. Many point of sales systems can be set up to register stock coming in and count down stock being sold. But note, the data entry through this process must be audited also.
Assets must also be stocktaked, are you losing crockery or cutlery at a ridiculous rate? Are your staff aware that you know stock and assets are missing? It’s important that you share with your staff the results of stocktakes. Registers must be set up to record the movement and borrowing of assets as well as breakage. A great way to maintain your assets and equipment is allocating the responsibility of upkeep to certain employees, who will be held accountable for these items.
I have found the installation of CCTV on sites has at times almost immediately corrected shortcomings in stocktakes. A standard 4 channel CCTV unit can cost as low as $700 (not including installation). Using these you can dial in from your phone or the internet and observe your staff while you’re absent. Staff have an uncanny way of behaving and avoiding undesirable behaviour after CCTV is installed. In one of my cafes I had two staff members resign immediately after the CCTV was installed and funnily enough my control of materials immediately became manageable. Dare I speculate that stock was being taken home in the late night closing hours? I will discuss CCTV further in a future posting. But would suggest all business considers the installation of at least 4 channels.
Lastly ensure it is policy with all of your suppliers that stock is never delivered and left without being signed off for. Have a designated person checking all stock off prior to driver leaving. Errors either deliberate or otherwise are common in deliveries and can be very detrimental to your bottom line. Always check you are receiving what you pay for.
A common place for theft is at the point of
sale by register operators.
There are few common tricks employees use in their fraudulence:
-Items not being scanned and passed onto friends and family,
– Collecting money for a sale but not ringing it upon the register to later pocket that amount of money
-Sale cancellations or refunds or frequent no
There are a few things you can do to minimise this problem, starting with the allocation of individual tills to cashiers who take sole responsibility for the balancing of
that till. CCTV can also be integrated with some POS systems so that the transactions show up on screen as the cashier is being recorded. The avoidance of manual tills is absolutely imperative as manual till do not report ‘no sales’ or cancelled sales, which need to be monitored daily and questioned with staff. Refunds and no sales should be set up so only the manager on duty is able to process those transactions.
The measures you can put in place to reduce fraudulent activity are numerous and here we have only covered a few that I employ. It certainly is a case of how long is a piece of string, though I would love to hear from other operators about some of their experiences with fraudulence and what measures they now have in place to avoid them.