14. Balance cash in the middle of the day. Occasionally balance every till and cash holder in the place in the middle of the day, rather than at the end of it. The break in routine demonstrates that you are actively checking the systems, and broken routines make (internal and external) thieves nervous.
That’s good for the business.
15. Stock take cyclically. Most stock is monitored by computer these days (or should be, since it’s so easy), so there is little justification for doing a massive stock take once a year.
Instead, break stock into logical categories or lots and stock take 8% every month (all stock will be checked once in the course of a year), or 1% of stock every day (the equivalent 2.5 full stocks a year!)
16. Don’t allow staff to ring up their own purchases. Instead they – and you – follow due process, walk around the front of the business, and have another staff member run the sale.
17. Don’t permit employees to sell to their friends or family. Same rule as above – follow the processes.
18. Seek expert theft prevention training and advice. There are many business security experts out there (one of our acquaintance, Phoenix Global, is headed by an extremely competent former police detective and offers a wide range of services to business clients – and has an excellent newsletter!)
When it comes to the collateral damage done to morale and team confidence, theft prevention is one area where there is no doubt that “a gram of prevention is worth a kilo of cure”!
19. Popularity is not a plus! When it comes to identifying the guilty party in cases of employee theft, there is strong anecdotal evidence that the more popular the employee the more likely they are to be the one stealing from you.
You can often double that rule when the employee has invested a lot of time into being popular with you or their manager, without the same attention to their relationship with other team members. Besides, other staff may smell a rat, and resist their advances, but managers, being one step or move removed from the action, are an easier (and more useful) mark.
20. Share your suspicions. If you suspect you have a theft problem, take all of your team into your confidence and ask for their help. 97% of people are inherently honest, and that 97% will work with you to monitor any situation in which you suspect foul play.
At best it may uncover evidence of a thief; at worst it may discourage one from trying, or minimise their activities.
21. Install passive security systems and use them. The advent of cost-effective surveillance systems makes close circuit TV monitoring of high risk areas logical. If you do install such systems, seek legal advice to ensure you are within privacy guidelines, and then monitor the output, and make it obvious to staff – and other visitors to your business – that you do.
Don’t be one of those who invest in the money in hardware but won’t invest the time into using it.
A Sobering Tale
More than 30 years ago a massive case of employee theft was reported by one major US company – their relatively junior Mail Clerk had embezzled more than $1,000,000 from their Petty Cash Fund!
Now, you might ask, “$1 million! From petty cash? But how?!”. Well, the circumstances that preceded it demonstrate just how easy it is to fall behind the times, get out of touch with evolving needs and let a gap open in your defences – in much the same way that we all face evolving gaps in our business defences these days along the technology frontier.
But, back to our Mail Clerk: in the 70’s, when snail mail was the norm, it had traditionally been managed by drawing small amounts of cash from a petty cash tin, taking it to the post office, buying stamps (or, if you were really sophisticated, having your franking machine charged), sticking them on envelopes, putting the postage purchase receipt into the petty cash tin to balance the funds, and recording the mailing. Transactions were then recorded in the Petty Cash Register, totalled, a reimbursement cheque requisitioned from the accountant, and the cycle repeated.
Because of the menial nature of mail and the relatively low values it involved, balancing the Petty Cash Register was usually assigned to a junior staff member and was audited, often very cursorily once a year, by the accountant around the end of a financial year. In the meantime, throughout the year, petty cash reimbursement cheques were issued almost as a matter of course, and without auditing or control.
The company we are talking about here underwent rapid growth, acquired a number of other companies and, as an economy measure, brought all of their mail handling into one location and, as tradition would have it, placed it under the control of a junior Mail Clerk. The gap opened wide in this case because the consolidated mail bill was now more than $1,000,000 a month and, yes, Petty Cash reimbursements were issued as a matter of course against a junior employee’s unchecked requisition.
The temptation proved too much and the young staff member fell victim to it – next thing you know, several million dollars had gone missing from petty cash!!!
Still, that was “the old days” and you can thank your lucky stars that that can’t happen in your business in this electronic era . . . . . . or could it?
It’s sobering to consider the level of electronic fraud that the banks and credit card companies currently tolerate as “the cost of doing business”, in much the same way as your local council might accept a small percentage of leakage from their water mains. Both parties view the level as “not worth fixing.” In the Sydney area, the council’s losses are estimated at around 30% of total water inflow; in the banking and credit community it’s nowhere near as high – only .5% - but, then again, that’s $25 billion a year world wide.
I suppose it depends on how you want to look at it!
Interesting Link: http://www.aic.gov.au/publications/rpp/60/executiveSummary.html