Archives for posts with tag: cash

In the fifth and final part of this series, we look at some examples of employee theft, and overall prevention measures. In part one we looked a cash handling methods, in part two we looked at credit card theft, in part three we looked look at best practices for preventing theft from inventory, and in part four we looked at employee time theft.

cctv

As we’ve talked a lot about during this series, there is an overriding concept that helps to protect against employee theft: Trust No One. As we mentioned in part one – thefts are almost always crimes of opportunity. The goal of this series, and of owners and managers, is to remove those opportunities wherever possible and to make it easy to find the culprit where removal of the opportunity is not possible. If your business does not have video cameras in place, you are at a serious disadvantage due to the protection they provide to employers, and also to employees. If you take nothing else away from this five-part series it is that video cameras with solve far more problems than they ever create.

Unfortunately, the number one culprit for serious theft from a business is a trusted manger. It should therefore be the responsibility of all managers to create systems that are robust, create a significant paper trail, and to welcome oversight.

Thefts occur for a number of reasons including to solve money issues and general opportunity. A significant number, however, particularly when it comes to managers, occur to get revenge on an employer or prove how clever the employee is to “beat the system.”

Even when thieves are not managers, in retrospect it is often found that they have flaunted their methods to co-workers or not taken basic precautions. These are employees who feel significantly undervalued and feel that they are “owed” what they are taking. What other excuse can there be for an employee who sells high specialized products on eBay under their own name?

manager

image courtesy of Pixabay

Managers

Giving managers freedom to act of the behalf of the company, does not mean that processes should not be implemented to ensure that the freedom and power that they wield are not abused.

Whether a manager has a company credit card, or just has access to one, statements should not be received at the place of business but to the home of the owner, if possible, and religiously reconciled each month. Similar precautions should be taken with company checkbooks, and company bank accounts. Not giving a manager a company card; but making them use their own which they then have to submit receipts to get reimbursed, can seem like a solution to company credit card abuse. However, a manager using their own credit card only works as a theft prevention method if the expenses claim, that this will ultimately result in, is reconciled with the same care that would be taken with a company credit card statement.

Payroll reports should be inspected every time a payroll is ran. Any employees who are not recognized should be thoroughly investigated. Ghost employees, employees who don’t actually work but collect a paycheck which is then spilt with whoever prepares payroll, can bankrupt a business if not caught.

Accounts such as fuel cards which should also be monitored for abuse. Fuel cards in particular are easily abused as the transactions are often automated and happen offsite. Thankfully, fuel card vendors have a number of systems in place to help monitor and catch embezzlement. Unfortunately, it is often managers with little oversight that setup such systems.

Owners and managers must embrace transparency when it comes to theft prevention, not just pay lip service to it. It is in a manager’s own best interest to create robust systems that create double checks on their own work for their own protection if nothing else. General expense tracking should catch embezzlement, or certainly lead to further investigations but this only works if someone is looking.

theft

image courtesy of Pixabay

Other Thefts

Stamps, or automated postage machines, are effectively cash. We rarely treat stamps with the same level of reverence and security as cash however. The employee who is running a side business on Ebay and offering free shipping courtesy of your business’s postage is not unheard of.

Cash tips often cause issues when certain employees have jobs that are considered “tip-worthy” and others are not. Tips given to one employee, to give to another, is just a recipe for disaster. If this happens in your business consider implementing a strict handling protocol, such as: the tip is placed in a sealed envelope, in front of the client, and deposited into a lock box to which only the tipped employee has access.

Access to the incoming mail can lead to corporate identity theft. Loan and credit card offers are routinely cold submitted to businesses through the mail. Just like with personal identity theft, it can be difficult to prove that a loan or credit card has not been taken out fraudulently in the name of the business. Corporate identity theft also has the added drawback, for the owner, that the amounts can be so much larger and unless you can prove embezzlement, the company will have to repay the loan. The sorting of mail, unless the business receives considerable volumes, should not be a low-level task. It should be left to the owner or a senior manager. Employees should not receive private mail at their place of employment. If private mail is received, employees should be aware that it may be opened.

Employees should not be able to change prices in your sales system. If it is not possible, or desirable to restrict this ability, a daily report should be ran to ensure that modifications of price have been done in line with company policy and not as a method of theft. Few clients check their receipts, and fewer still say something when they think something looks off.

Always take complaints from clients with regards to wrong change, forgotten change, or overcharging seriously and investigate thoroughly. If the employee can’t come up with reasonable explanation, you may very well have interrupted a theft.

 

court

image courtesy of Pixabay

Prosecuting Theft

Always terminate thieves!

Always prosecute thieves!

To an employer the penalties given out in most employee theft cases make it seem not worth the time or effort; however, unless a thief has already been through the process, to most employees being prosecuted carries significant weight. Nowhere is that weight felt more strongly than with your remaining employees. When controls are lack it is not uncommon to have multiple employees stealing at same time in different ways.

When terminating an employee for theft, try to get the police involved at the termination stage. It makes a significant impact on the employee concerned and sends a significant message to everyone else in the business. Of course, if you are going to do this you must have your facts laid out and they must be easy to follow. If the police can’t, or won’t, get involved at the termination stage you may have to go to a police station and report the theft in detail. Again, ensure that you have all your documentation, and facts straight; however, do be careful not to over do it. I once had a case of what I believed was a $1,000 embezzlement that took place over six months. The prosecution never went anywhere, I believe, because the stack of paperwork I presented to the detective was too overwhelming for the amount of the theft involved.

Different states have different amounts at which a theft stops being a misdemeanor and becomes a felony. This will have an impact on how the case is handled and sentence that the accused will ultimately receive if convicted. Always be prepared to go to court, and always make a victim impact statement if given an opportunity to. You cannot complain about being unhappy with the sentence a thief has received from a court if you are not prepared to help the prosecutor and the process.

 

handcuffs

image courtesy of Pixabay

Examples of Thefts

The following are examples of the type of thefts that I have either been involved with uncovering or have heard about from colleagues. Some are quite ingenious and some are just plain stupid.

1: A late night receptionist who used a reloadable visa gift card to give themselves refunds each night. They would batch out the credit card machine, run their refund, and then rebatch the credit card machine. The only way they were ultimately caught was that the visa card had been a gift from their employer and they had registered it online in case it got lost.

2: A cashier engaging an elderly client in significant conversation so they lose track that they have not received their change.

3: An employee changing prices of items in the sales software, but charging the client full price and pocketing the difference.

4: The super helpful employee who takes the trash out from all around the building, including the inventory storage room where they help themselves to some easily resalable items. The items are removed from the building with the rest of the trash and they then return in the evening after the building is locked up and retrieve the items from the trash. They were ultimately caught because they stole some items that were discontinued and so relatively rare. A search on eBay uncovered the items being sold under their own name. A look at their eBay history provided a history of everything they had stolen over a two-year period. In addition, their listings offered free shipping which explained the thefts of stamps.

5: The employee who discovers that the payroll app has a feature that allows them to clock-in from home before leaving for work and then clock out when they get home giving them an extra 30 minutes every day.

6: The employee with money troubles who intercepts the deposits after they have been placed on the business owner’s desk, taking a portion of the cash of the day and the deposit slip, and replacing it with a new deposit of their own making.

As mentioned before employee thefts are crimes of opportunities. Remove those opportunities and half the battle is won. Create a culture of transparency, and of checks and balances, and the other half will also be won. I mention to employees all the time; “Don’t put me in the position of where I may have to suspect you of something. Make it obvious that it can’t be you.”

In this ongoing series we look at ways of preventing employee theft.  In this part we take a look at best practices for preventing theft when working with cash, in part two, we look at how to prevent Credit Card theft from the business and customers, in part three, we look at inventory theft, and in part four we look at time theft.

There is an old saying in management circles; if you have not found theft in your business you are not looking hard enough.

Most business thefts are crimes of opportunity. If you remove these opportunities, or make the likelihood of a thief being caught more certain, you can prevent most thefts. Don’t underestimate the value of deterrence! The way to remove these opportunities is to have systems in place that immediately indicate when there has been a problem.

Although all thefts are about money at some level, there can also be a certain amount of revenge and intellectual challenge. The disgruntled employee proving how clever they are by being able to “beat the system” and thereby the manager, or owner, they feel undervalued by is a common theme in workplace thefts.

dollars-426023_640

Image Courtesy  of Pixabay

Trust No One

A key concept in theft prevention is to not trust anyone – that includes the people that you trust. While that sounds like an oxymoron, it is actually an appropriate way to ensure that you do not place your team in a posted tells difficult situation. What that means is that the systems you put in place should never place too much trust in any one person and therefore there should be no suspicions about anyone, because there are never any situations where more than one person has access to cash. A system that embraces this model is not put in place because you do not trust the people that you work with, or who work for you. They are put in place so that you do not have to be put in the position of having to distrust them.

It should go without saying, that there must be a system in place for recording inventory and services sold and paid for by clients. Even if you are selling penny candies by the lb. there needs to be a system in place to know how many lbs. have been sold by the end of the day, or shift, and how much money has been brought in. This most basic of elements is what all other elements of a theft protection system stem from. This system must also be capable of issuing a receipt to the customer showing what they bought, how much they paid, and what change, if any change, was given back.

Video cameras which record, and are secure, should always observe all transactions. The quality of cameras is such now that individual bills can be counted, and identified, significantly simplifying the job of finding errors or theft. It should be noted that cameras can also be used to exonerate employees and therefore should be seen as a win-win for both employer and employee.

If a theft is uncovered then the employee concerned must be terminated. It is generally up to the manager, or an owner, of a business whether to prosecute. I generally advise to go ahead and prosecute as long as there is evidence and not just a strong suspicion as it sends a message to other employees. If procedures where not followed, and there is a suspicion that a theft may have taken place, then at minimum disciplinary action should be taken, depending on the employee and whether this a repeat offense should indicate whether this action should be termination.

It is important to keep in mind that the discovery of an issue or potential issue should be seen as the first sign of a much bigger problem. This will not be the first theft, but only the first theft that you have discovered.

cash-register-1885558_640

Image Courtesy of Pixabay

Cash

When cash handling is involved in the daily operations of a business, then there should be a dedicated cashier per shift. If the requirements of the business are such that multiple people handle cash, then each cashier should have their own cash drawer. The cashier should count their cash drawer that the start of their shift. A standard and set amount cash should in the drawer each day. I should clarify that only a cashier has access to the cash drawer. Other members of staff may receive a cash payment from a customer, but only the cashier should process the payment and issue the client’s change. In an ideal world, the cashier would be the only one to be involved in all cash transactions, but that is not always possible.

At the end of the casher’s shift the cash drawer needs to be counted and the cash taken in should match the transactions recorded in your sales system, leaving the starting amount of cash that the drawer for the following shift / day. The cashier can be involved with the balancing of their drawer; however, a supervisor, or manager, should also be involved.

If the cash drawer is over then most likely a transaction has not been processed correctly: services / inventory was given to the customer, but the transaction was not recorded in the sales system. It should also be noted that the client would also not have received a receipt. High cash volume businesses, such as fast food restaurants, often enlist the help of customers to ensure they receive a correct receipt by offering a reward, such as the meal for no charge. This is to ensure that transactions are recorded in the sales system.

There are two explanations for cash being over. A genuine mistake in the processing of the transaction was made, or a potential theft has been interrupted. Hopefully a partially completed transaction will be able to be traced down through your sales system and the mystery resolved. However, it is important to be on the lookout for employees telling customers that the printer is broken, and therefore they cannot have a receipt, or unconcluded invoices being printed as receipts. These are indications of a theft taking place – the employee places the cash in their pocket and the transaction not processed at all, or only partially processed. An ongoing search for partially completed transactions should be part of a general auditing process.

Cash being under is, again, either a mistake with the transaction (unlikely – particularly if it is a large amount) or just straight theft. If the integrity of the cash drawer has been maintained throughout the shift, then the cashier is responsible. This could be cause for disciplinary action up to, and including, termination. I am not in favor of making cashiers pay back drawer shortages. If the cashier is stealing, they are just giving the business back the money they stole, and everyone thinks that is the end of the matter. If the cashier did not steal they are being penalized for a system problem.

If cash drawers are routinely under, but by amounts that could be human error, and the cashier(s) themselves seem just as frustrated by the problems as you, then a potential solution is the put each cash amount received into a sealed envelope and then into the cash drawer. This allows for the balancing of the individual transactions against the sales processing system. The down side to sealing the cash from each transaction, other that the quantity of envelopes used each shift, is that is significantly increases the amount of cash in the drawer that is required as all change has to come from this “float” and therefore a larger amount of cash may be required. This carries its own risk and the total volume on cash on the premises is higher than it might otherwise be. But it might be the only solution to constant shortages. It should be noted that I have never needed to employ this strategy for any length of time. The theft was either uncovered or the errors stopped when an employee unexpectedly left; one assumes because of the additional scrutiny.

 

savings-2789112_640

Image Courtesy of Pixabay

 

There are additional red flags to watch out for. Cashiers, who use their own pockets for “storing change because we are busy” should be treated with suspicion. This is the mishandling of cash and should lead to at minimum an explanation of why this is a problem with additional disciplinary action and increased scrutiny. Clients who complain about not receiving the right change, that their receipt / invoice is wrong, or that don’t understand why they owe money when they are sure they paid their bill during their last visit are all red flags of theft. Usually in these instances the employee concerned, if you can track them down will not be able to explain what happened. Of course, customers can make mistakes too, but in my experience these are easy to find and show to the customer why they are mistaken.

Once the day’s cash is counted, is found to be correct, and the cashiers drawer has the correct float, the cash should be sealed, with a deposit slip, and secured; ideally in a safe.

A senior manager, not one that helped settle the cashier’s drawer, should then double check the settlement, usually the next day, with the sales system. It is important that a copy of the deposit slip that actually goes to the bank is kept on site. The senior manager, or a 3rd party, should then deposit the cash at the bank and the deposit receipt should be matched to the deposit slip. These, of course should also match the sales system and ultimately the amount recorded on the bank statement.

Next week we look at Credit Cards!

%d bloggers like this: