Tuesday September 01 , 2015

LossBusters Blog

Nuggets of wisdom from Libby
Tags >> Employee Theft
Mar 29

Your Tolerance for Cash Shortages – Bearable or Terrible?

Posted by: Libby | Comment (0)

If you lost 5% or more of your sales and it just can’t be explained how it occurred, would it bearable or terrible to the financial health of your business?  Shortages in cash may be somewhat understandable.  Cashiers handle cash transactions, credit cards, gift cards, checks, traveler’s checks, and any number of discounts and coupons.  When transactions go awry for some reason, they must void, no sale, refund, discount, or reduce the price in some way.  During interactions with the public they may encounter attempts at credit or gift card fraud, bad checks, counterfeit, price changing, quick change schemes, drive-offs, walk-offs or some other new scam of the day.  The cashier is expected to know all of these transactions, handle them flawlessly, and yet have a perfect cash drawer at the end of the shift. 
But what if they don’t?  What if the cash is short?  And how much does the cash till have to be short to get your attention?  Some owners and/or managers create a policy that shortages must be paid back.  There are many reasons why this is not a sound policy, and against the law in some states.  Frequent cash drawer overages are not desirable either.  Overages may be indicative of poor cash management or worse, manipulation of the cash operation and theft.

So, what amount of cash shortage, or overage, is acceptable within the framework of your business?  Knowing that a perfectly balanced cash drawer is not practical in a blind remittance procedure, what is bearable?  More importantly, are cash handling policies written, performance expectations clear and disciplinary actions for excessive cash overages and shortages fair and consistent?

Establishing “Bearable”
•    Policies and procedures - Establish written policies, procedures, and expectations in handling transactions.  They should include before and after shift count verification, single drawer accountability, manager authorizations for voids, refunds, over rings, and closing the cash drawer after every transaction.  Calculators and unauthorized credit cards “skimming” devices near the cash registers must be prohibited and stated in policy.

•    Blind remittance – At the end of their shift, cashiers should not be privy to cash totals on the ‘Z’ tape as they countdown their cash till.  They should report what they have in their till, minus the beginning bank.

•    Communicate Expectations – Communicate cash management and security related expectations via written memo, employee handbook, and as part of everyday operations.

•    Signed cashier policies – Have every cashier sign cash handling expectations. Retain in their individual personnel files.

•    Making Change – Teach cashiers the habit of counting back change to the customer.

•    Cash shortages and overages – Establish a tolerable dollar amount of cash shortage or overage.  Some companies have established a $3-5 range per individual cash drawer per cashier depending on the number of cash transactions and total sales per shift.  Set an aggregate amount over the course time as well; i.e.  .1% of sales each month.

•    Establish acceptable level of exceptions – Set acceptable performance standards in the number and dollar amount in percentage to sales for voids, over rings, refunds, no sales, check average, and others that are pertinent to your business.

•    Cash drops – Managers should remove excess cash and large bills from the cash register and place in the safe.

•    Train – Train cashiers on how to handle all transactions, including handling suspected counterfeit, and the common scams involving credit/gift cards and quick change.

After policies and procedures are established, expectations are clearly communicated, and cashiers are properly trained, it’s time to routinely evaluate their performance.  Emphasis should be placed on operating the cash function with minimal errors.  When errors do occur and the cash handling performance is not within established guidelines, the appropriate action should be taken to correct the behavior or performance and get them in compliance.  If the individual cashier’s performance is routinely outside of the established acceptable performance levels, they move into “terrible” and must be dealt with accordingly.

Dealing with Terrible
•    Formal cash management reviews - Establish a formal cash management performance review process.  (Daily, Weekly, Monthly)

•    Progressive Discipline – Implement progressive discipline process consisting of warnings, written reprimands, and terminations for poor cash handling performance that is not in compliance with acceptable standards.

•    Investigations – Investigate large unexplained shortages or overages to determine the cause. Unexplained large discrepancies should enter the progressive discipline process at a higher, more serious level, i.e. Suspension, Termination.

•    Retrain – Retrain cashiers that are not in compliance with performance standards.

•    Reassign – Reassign cashiers that are not in compliance with cash management standards to a non-cash position, if available.

•    Policies and procedures – Reevaluate policies and procedures relating to cash management, security processes, and disciplinary measures and make adjustments according to the needs of your business.

Handling customer transactions is a tough job, even for the most experienced, conscientious cashier.  Mistakes happen and unexpected shortages and overages occur.  The key to successful cash management operations is to have sound policies and procedures, clear expectations, routine audits, and fair and consistently applied progressive discipline.  Your shortages will quickly respond from “terrible” to “bearable”, increase profitability, and make you more competitive in the marketplace.

For more information on security, safety, loss and crime prevention for restaurants, visit www.LossBusters.com. For daily tips on restaurant loss prevention, follow on Twitter @LossBusters

Feb 25

Say It Ain't So - The Bogus Robbery

Posted by: Libby | Comment (0)

The restaurant manager’s home phone rang. She recognized the cell phone number of her shift manager on the display. Before she could say “Hello” she heard a loud, frantic voice declaring, “I was robbed!” The shift manager then described the frightful event of being robbed at gunpoint while on way to the bank with the deposit. On a fairly desolate street the shift manager described stopping behind a stalled vehicle. Suddenly her driver’s side door was yanked open, and a gun was pointed at her face. The gunman then demanded the deposit that was lying on the passenger seat. When she picked up the deposit, the gunman grabbed and jumped into the front passenger seat of the vehicle in front of her. The car then sped off.

Sep 17

Why My Employees Won’t Steal From Me – 5 Myths

Posted by: Libby | Comment (0)

The statistics are staggering.  The latest National Retail Security Survey states that 45% of losses to retailers are attributed to theft by employees.  The Association of Certified Fraud Examiners (ACFE) reports that 5% of revenues of a typical organization are stolen by company workers.  The average internal fraud scheme goes undetected for 18 months.  Small businesses are particularly vulnerable since they don’t have the resources or the processes in place to avoid and/or detect fraud activity.  With no formal loss prevention programs in place, many owners and managers rely on their experience and expertise to react to incidences of employees stealing.   Others rely on their beliefs, perceptions and ideals that their employees would not steal from them for a number of reasons. The following are myths associated with those ideological thoughts:

My employees would not steal from me because …

1. They Like Me – While it is true that good relationships with the boss may deter a small percentage of employees from stealing, research has shown that dishonest employees are driven by a number of factors.  Loss Prevention professionals cite the presence of the Theft Triangle as the breeding ground for employee theft. When these elements are present in the workplace, employees may be tempted to steal or become involved in other counterproductive behaviors.

Theft Triangle
a)    Motive - Potential gain and use for the cash or product
b)    Opportunity – Ability to quickly and safely steal the cash or product
c)    Low Risk of Detection – Perception of low probability of getting caught

The employees may genuinely like the manager or owner, but if the three factors are present in the work environment, the temptation to steal may override friendship.

2.  They’re My Best Employees – Many managers and employers perceive that because certain employees are self-motivated, hard workers, they do not have any integrity issues.  They are above reproach simply because they exceed expectations in their performance.  And because of that belief, those employees are not scrutinized for compliance to the rules, nor suspected of counterproductive behavior or theft.  Without accountability to the rules, even the best of employees may take advantage and steal.

Jul 18

Credit Card Skimming – A Business and Customer Nightmare

Posted by: Libby | Comment (0)

“Hey man; how do like your job at that fast food place?”  “It’s alright.  It gives me a bit of cash for some bills, and I get to eat for half price.”  “So, do you work much in the drive-thru?”  “Yeah, I work the drive-thru cash quite a bit. Why do you ask?”  “Well, how would you like to make a LOT of easy money while you’re working the drive-thru?”  “Keep talking; I’m listening.”  “OK, here’s the deal.  I know these guys that will give you a credit card skimmer that fits in your pocket.  All you have to do is run a credit card through it at the same time you swipe a customer’s card as you ring up a sale.  You get to decide when you think it’s safe and won’t get caught.  You get paid $25 for every card you swipe in the skimmer.  What’s beautiful is that it doesn’t matter what kind of credit card it is.  You get paid for all of them.  You meet with me after your shift, give me the skimmer and I pay you for all the information you’ve swiped.  I’ll give you another empty skimmer and we do it all over again.  It’s that simple.  Are you in?”  “Oh yeah, I’m all in. Sounds great; let’s go!”

This conversation could possibly be taking place with your employees.  Credit card “skimming” fraud is epidemic in the QSR and Quick Casual restaurants as employees such as the one above are recruited or planted by organized crime rings.  The primary targets for the collusion are low wage employees that handle customer credit card transactions.  In this case, the fast food, drive thru cashier.  They handle a lot of credit card transactions in relative isolation.  The customer information captured on the portable skimming device is used to make fraudulent credit cards.  Customer identities are stolen to produce other fraudulent documents such as driver’s licenses and credit applications.  The result is often a trail of unhappy customers with credit messes to clean up, large amounts of stolen merchandise, and a public relations nightmare for the company.

Jun 13

Employee Hotline – Avoid Passing in the No Passing Zone

Posted by: Libby | Comment (0)

Jeremy has been working in the restaurant for a few months, usually after school and weekends.  He’s learned every station in the kitchen and even works as a cashier whenever needed.  Several of his fellow employees are stealing both cash and product from the company on a regular basis.  They cover the shortages by manipulating sales so that the register is never short.  They borrow manager’s keys to the back door and place cases of product by the dumpster where their friends pick it up.  Jeremy pretends that he doesn’t notice and does not associate much with the other employees.  Jeremy is uncomfortable about it and is now looking for another job.  He’s very apprehensive about telling one of the managers because he’s not confident they will handle it well and may identify him as the one who told on them.

Dec 28

Wrestling with a Million Dollar Baby - Skimming

Posted by: Libby | Comment (0)

The restaurant industry is rife with ways to lose profitability.  Just when you think you have things buttoned up, a new twist comes along that can threaten your business and you may not even know about it.  Last year the restaurant industry lost an estimated $200 million to a theft scheme called “skimming”.  The cashier or server is equipped with a portable electronic device commonly known as a “skimmer” that can be easily be hidden in a pants pocket.  When handling customer credit cards the employee swipes the card through the POS system to capture the sale and while still in possession of the customer’s card, swipes the card through the skimmer as well.  The customer’s information contained on the magnetic stripe on the back of the card is captured in the device.  The information is then typically sold or transferred to organized rings that produce counterfeit cards and rack up fraudulent charges.  

Dec 12

A leopard that couldn’t change its spots

Posted by: Libby | Comment (0)

The adventure usually begins with a notice from the bank that a deposit was either short or is missing.  It triggers questions of who was supposed to have taken it to the bank and when.  When the accountability for the deposit is determined, the employee in question undoubtedly swears that they followed deposit protocols to the letter and denounces the bank records.  Requests are made to the bank to inspect their night depository including the chute and all deposit records.  If applicable, recorded video may be viewed to determine when the particular deposit in question was prepared and removed from the store.  It’s a long, arduous process.  Trust levels are threatened, feeling can be hurt and false accusations could lead to civil action.

Oct 31

The art of building a bank

Posted by: Libby | Comment (2)

It has nothing to do with concrete blocks and mortar. Cranes and bulldozers are not involved, and it has no reference to the facility where you make your deposits or take out a loan.  The first time you encounter it, you may think you’re ahead of the game.  What it may all mean is the foundation for a scam to steal hard earned cash from the register.  Building a bank, also known as “padding the register” is part of a theft scheme and you may never know it without a keen sense and knowledge of how it’s done and the skills to do something about it.

Oct 19

Don’t wait ‘til Halloween for ghost hunting

Posted by: Libby | Comment (0)

The assistant manager was in charge of inputting hours worked by employees into the back office system.  She was very diligent in making sure employees were paid accurately and that the employees were punching in and out correctly.  She applied correct discipline to those that forgot to punch in or out.  Her supervisor was proud of her that she took such care in the accuracy and discipline of their payroll.  He was so confident in her competency that he left it all in her hands.

Jun 16

What makes you say that?

Posted by: Libby | Comment (0)

I met with a potential client this past week.  It was a referral from a current client that knows I can help this business with their many in house “issues”.  The manager of the business said that he suspected an employee of stealing and perhaps bringing drugs into the workplace.  When I asked, “What makes you say that?”  He then related that the employee in question changes addresses, moving from friend to friend.  One of those former roommates told him that his employee frequently brought home unpaid merchandise for them all to share.  There were also unexplained cash shortages on the community cash register during the shifts the employee was working. 


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