Most venue owners and managers associate fraud with large corporations they read about in the newspaper or on the net. However, every business larger than a one-man news kiosk offers plundering opportunities to the employee looking for them. Embezzlement is like a silent, insidious cancer - hidden and unsuspected.
With soaring expenses, shrinking margins of profit, and ever increasing competition, the owner or manager of a venue is hard pressed to keep the doors open and remain solvent. They are in no position to share their hard earned profits with untrustworthy employees and the delicate balance between financial solidity and insolvency may well hinge on their ability to plug the leaks.
Most fraud in small business centers around false invoicing, bogus suppliers, staff issuing payments to themselves and concealing the paperwork on the computer, not ringing up cash sales as well as fraudulent credits on the EFTPOS machine.
So how do we minimise risk? As managers and owners you should:
- Sign or countersign all cheques and internet and BPAY transactions;
- You should do random stocktakes for at least ten products a day and relate this physical count to the computer records;
- You should make it your daily habit to review the bank account via the net.
- Get involved in the bookkeeping; do not become too dependent on the bookkeeper;
- Start asking questions when you are regularly contacted by creditors asking for payment;
- Ensure all sales invoices have a customer’s signature on them;
- Check the bank reconciliation; this should be done at least once a month;
- Check the gross profit margin, when it starts to drop alarmingly it may well be in the purchase of stock; that is, creditors are paid twice and one payment goes to the staff member. Another reason is that some cash sales are not being processed through the point of sale system;
- Also check the stockturn. A jump in the stockturn without any noticeable increase in sales can point to an irregularity in the amount of stock on hand and;
- Implement CTV systems and review the footage if you suspect irregular activity and restrict after hour’s access to the venue.
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