An Indian Newslink front page report (November 15, 2010) highlighted the case of a dairy owner, who had become a victim of employee fraud.
It was unfortunate that an attempt to help someone from back home (India) had cost the businessman about $40,000.
Going through the Report, I was convinced that some simple steps and procedures would have avoided all the losses and heartburn that he suffered.
One of the great things about New Zealand is that people are extremely trustworthy and honest.
I have had similar experience in India.
Unfortunately, not everyone coming to New Zealand remains the same. Perhaps, they feel that, as expatriates, they can do anything and get away with it.
Being in a strange land, they do not experience the normal societal pressures.
Having cameras recording the till will only be a deterrent at best, and not a way to stop or prevent fraud. The other problem is that it takes a long time to go through the footage to detect fraud, and a skilled fraudster can avoid being captured by the camera.
An efficient System
One of the simplest ways to stop the fraud would be to have an ‘Integrated Point of Sale System,’ which tracks the quantity and value of stock at all times.
Such a System will enable the owner to have better control over the happenings in the store when he or she is away.
However, fraud may still occur if items sold are not punched into the System.
The market has various systems that some suppliers have integrated with the Point Of Sale for ease of placing orders and entry of goods supplied.
Among the advantages of a good Point of Sale System are (a) Up-to-date information on quantity and value of stocks (b) Ability to know when stocks reach critical levels (c) Easy to follow end-of-day procedures including cash and EFTPOS tally and (d) Instant knowledge of what the cash balance should be.
In addition, other simple tools can assist in the management of the business such as (a) Instant update on change in pricing and special offers (b) Automatic alerts for re-ordering stocks (c) Identifying high turnover items (d) Monthly trends of items sold and (e) Reviewing margins on products sold and working out the gross contribution to the business by product.
Long-term benefits
The cost of installing system may appear high but it is a small price to pay to avoid fraud leading to tens of thousands of dollars.
If you can get 1% saving in the Gross Margin over the year through better stock management, the system will pay for itself. On a turnover of $20,000 per week, it would add $200 to your savings or income.
Anil Lamba is employed in the Business Advisory Service with BDO Auckland at their North Shore office. He is also a MYOB Certified Partner. Telephone (09) 4870036 or 021- 413421 Email: anil.lamba@bdo.co.nz
