Tower Systems helps local small business retailers cut employee theft in 2024

From the data captured from Point-of-Sale software from my software company being used in their business, I was able to show Harry and June that their business was being stolen from to the tune of at least two thousand dollars a week, that it had been going on for two years and that it was only happening four days a week.

We were sitting in a coffee shop near their business. They brought the shop employee roster with me as I asked. There was only one person who worked the days and specific hours indicated by the Point-of-Sale software.

‘It can’t be, they’re family,’ June said looking across at Harry. ‘She’s my niece,’ said Harry, ‘she’s amazing in the shop. Customers love her’. ‘We couldn’t run the business without her,’ June chipped in. ‘Yeah, it’s got to be a mistake,’ Harry said looking at the roster.

Harry had reached out to me a couple of weeks earlier as their accountant had advised him that the business was not making the type of money that it should. The accountant had said to him ‘something’s not right’.

Harry thought there was something wrong with the software. That’s why he called me.

I asked for a copy of their data and did a deep dive into a hidden set of encrypted sales records stored by the software to enable this type of investigation of possible employee fraud.

Having done this type of research many times in the past and having worked with police and prosecutors as an expert witness, I knew for certain that Harry and June were being stolen from by their niece.

They left the coffee shop meeting certain that the problem was with the software. It was another year before Harry and June followed my advice, installed hidden cameras and got the evidence to implicate their niece.

The day they confronted their niece she walked out. They never recovered the money. They feared a split in the family and didn’t pursue criminal charges.

In all, Harry and June lost over three hundred thousand dollars. They sold the business soon after.

Employee theft can be a high cost to indie small business retailers. Different studies in Australia and elsewhere coupled with our own knowledge of theft in indie small business retail indicates that employee theft costs a business around 75% of the total cost of theft.

The quantum of  employee theft is often under considered by small business retailers. We think  this is because of denial. However, given that the amount that can be taken in one hit or in micro amounts over a long period of time can be considerable once toted up.

Employee theft can be traced and as a result of this stopped. Our small business POS software helps retailers do this. We back the theft mitigation facilities in our software with training, advice and even data analysis to uncover possible instances of theft that may have hitherto gone undetected.

Here is some of the small business retail theft mitigation advice from our POS software retail experienced team:

1. Track your stock. Receive all stock into your business through your computer system so you know exactly what sock you have.
2. Scan everything you sell.  Do not use department keys as this makes it easier for employees to steal since they know there is no trackback to stock on hand. Using department keys is an invitation to steal.
3. Track every sale by employees. Give your employees a card with a unique barcode or have them enter a code – to track every sale they make back to them. Change the code every six months or so.
4. Do your end of shift through your software and have a zero-tolerance policy on being over or under. Reconcile banking to your computer software end of shift. One business where this was not done was being skimmed regularly for $200 a day.
5. Do spot cash balancing. Unexpected checks can uncover surprises. One retailer needing to do a banking during the day uncovered a $350 discrepancy that lead to discovery of systematic theft.
6. Change your roster. Sometimes people work together to steal. One retailer found a family friend senior and their teenage daughter stealing consistently.
7. Setup a theft policy.Put this on a noticeboard in the back room. Get staff to read it and sign up to it. See the last page of this advice.
8. Keep the counter clean. An organised counter reduces the opportunity for theft. It makes detection easier.
9. Have a no employee bags at the counter policy. This makes it harder for them to hide your cash.
10. Beware employees who carry folded paper or small notepads. These can be used for them to keep track of how much cash is in the register that is theirs – i.e. not rung up in the software.
11. Advise all job applicants that you will require their permission for a police check. From the outset this indicates that you take your business seriously. In many situations applicants who have been asked for permission to do a police check advise they have found a job elsewhere.
12. Do not take cash out for your own use in front of employees. If they see you take cash for a coffee or lunch some will see this as an invitation.

At the start of a new year is a good time to take a close look at whether employee theft is an issue in your retail business. We’d love to help you with that.