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Use an independent accountant to reconcile the books
Use an independent accountant to reconcile the books

Retailers beware: Strategies to deal with staff theft

Internal theft is an ugly blight on retail trading. DAVID GELLER offers strategies to help.

Over the years I’ve heard countless stories of internal theft. Sometimes sales staff brazenly stealing from the cases, other times back-office staff rigging the books.

In one case, a jeweller found his bookkeeper – a relative no less – had been writing cheques to non-existent suppliers and cashing the proceeds. She was caught; however, that store’s checks and balances were so bad that the new bookkeeper was soon at the same game.

Many jewellers find it difficult to keep on top of their financials but if you give up your responsibilities in this area, you will soon pay a heavy price for doing so.

"Many jewellers find it difficult to keep on top of their financials but if you give up your responsibilities in this area, you will soon pay a heavy price for doing so"

Here are nine ways to help reduce fraud and internal theft.

  1. Use an independent accountant to reconcile the books – two sets of eyes will catch or any would-be thieves. If the store above had done this, stray cash deposits would have popped up in the first month.

  2. When stock arrives, photocopy the supplier’s invoice and give the copy to whoever enters the items into the Point of Sale (POS). After entering inventory, print copies from the POS of items just entered and compare it to the original invoice. If someone is ordering extra items and not entering them, it’ll show up here.

  3. When paying bills, one bookkeeper shouldn’t handle the whole procedure. Let the bookkeeper assemble the bills and prepare the payments, attaching cheques or EFT authorisations to the original invoices, then handing the lot to the owner to sign. Also print the accounts-payable record for that vendor. Do this for two reasons: First, look to see if what was received was entered. Second, look at the vendor report to see if the bookkeeper has used any credits. After the owner signs and OKs everything, the bookkeeper can then mail the cheque or make the EFT payment and file the invoice.

  4. All cheques should have an invoice attached to the cheque for the owner to sign, not the bookkeeper. This allows owners to keep track of payments for suppliers they don’t know. You might ask the question one day, “Just who is Acme Plumbing?”

  5. The cash-register drawer should have the same amount of cash in it every day – say $200. Remove excess cash daily, taking it directly to the bank or the safe.

  6. Make paper copies of the items in each display case, including SKU numbers, a small description, retail price and the case they’re in. Each morning, count the number of items in the case and check it against the paper record. If the numbers don’t match, don’t go further until you find the cause of the discrepancy. This process will keep everyone on their toes.

  7. Instead of conducting a stocktake only at the end of the financial year, do a count of one showcase at a time each month. The choice of case should be random, determined by the owner. This way staff won’t know which cases and items are being monitored.

  8. Thought I forgot about the shop? Never! I’m sure we experienced theft of metals, stones and findings for many years. I had many jewellers working at home to earn extra money and don’t know how many heads and lobster claws went out the door. I once let a jeweller go because he was incompetent and when I cleaned out his bench I found, to my surprise, several melted heads and shanks. To fix this, I hired a shop foreman who gave out and inspected all jobs to the jeweller, the polisher and then to the sales staff when a repair job was done. If a jeweller needed a finding, he got it from the foreman and not the findings cabinet.

  9. Many jewellers order three heads when they need only two, just in case one is melted. Unused ones should be returned to the foreman for stock or to the office to be returned for credit. On the back of each envelope, write the amounts needed for the job and the number enclosed. When the foreman gets the job back, he’ll know if something is missing and yell, “Hey where’s the extra head? Give it back!” This system also helps cut down on wasteful use of materials.

These are just some of the strategies we’ve used to counter internal theft. I wish it weren’t so but I’m sure you have your own stories. With some vigilance, stores can put an end to such losses.












ABOUT THE AUTHOR
David Geller

Contributor • JewelerProfit


David Geller is director of profits at JewelerProfit and author of Blue Book, a guide to jewellery repairs and custom design. Visit: jewelerprofit.com









Wednesday, 23 May, 2018 06:54pm
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