Preventing Employee Theft

Employee theft has been a problem for retailers since the beginning of retail… which roughly dates back to the beginning of commerce. Unfortunately, we still haven’t solved the problem. Employee theft can range from the pilfering of store supplies to elaborate schemes in which thousands of dollars disappear before the very eyes of the business owner. In fact, in the retail industry, one study by a forensic accounting firm cites employees “out-stealing” shoplifters.

Despite the disturbing facts surrounding employee theft, it’s not helpful if you simply assume the worst from your employees and create an atmosphere of distrust. That said, there are certain measures you should consider to limit your exposure to dishonesty. Your POS system can provide you with tools to both detect and prevent instances of employee theft. By using them, and by showing your employees that you are paying attention to their work, you can go a long way toward “keeping them honest.”

Tips for Using Your POS System to Combat Employee Theft:
• Make sure every POS user has a unique user ID and/or password to log into the system.

• Run a report each day or each week to review voided items, and do the same with returns. Make a point to ask questions regularly about any transactions that don’t make sense. Contact your POS vendor if you need assistance finding or using these reports.

• Require that your employees enter a specific reason for any voided sales.

• Do a physical inventory check on any high dollar returns. Did the items really get returned?

• Require a customer name, Driver’s License number, and phone number for returns exceeding a certain dollar amount.

• Watch returns on non-diminishing or non-stock items carefully.

• Look for payment types on returns. Flag any returns where the refund payment differs in type from the original payment (i.e. purchased with a check and refund given in cash)

• Promote accuracy with your registers, and reward your employees when the registers remain in perfect balance for a certain period of time.

• Review stock adjustments. Limit the entry of stock adjustments to employees who have an inventory management role.

• If you have a camera system, make sure each cash drawer is visible. Reports from your POS system coupled with video footage can tell the story of what is happening in the register.

If you suspect that an employee is stealing, trust your instincts and investigate. If you have good processes in place, your POS system can facilitate both the prevention and investigation of employee theft. To read more in this topic, take a look at the following resources online:

Kessler International Report

NRHA Loss Prevention Training

AR = Attention Required

The Accounts Receivable (AR) functions in your POS system are designed to help you serve commercial customers efficiently. If you haven’t paid much attention to them, it’s worth taking a few minutes to check them out. What payment terms does the system provide for? What kinds of discounts can be calculated? Can you offer discounts for prompt payment? What are the statement printing options? Can you customize the messages that print on your statements? Can you email statements? You might find features you didn’t know about, and therefore more options for managing credit with your customers. If you find there are features you don’t understand, ask your POS vendor to explain how they work.

On its own, your POS system will keep track of customer charges and payments. But without the required attention and proper maintenance, these functions can cause major headaches. To use AR effectively you need to open new accounts carefully, utilize credit limits, get proper documentation for each transaction, and reign in past due accounts.

By opening an account for a new customer, you are literally loaning part of your cash flow to them. Start this process by providing a credit application (consult with your attorney regarding the language in the application) and consider requiring a personal guaranty for commercial customers. Obtain documentation for tax exempt accounts, and maintain a paper file for documents related to each account. Finally, establish a checklist each time you set up a new account in your POS system. Forgetting to enter a credit limit or clicking a sales tax flag could lead to problems down the road.

Your POS system should be set up to trigger a credit hold for accounts that are past due or over their credit limit. You may also have the option for certain employees to override this hold at the cash register. It can be helpful to allow a manager or other trusted employees to override credit holds, but you should be sure to establish and communicate a policy that limits how much further any customer’s credit can be extended in your absence.

All customers charging on an account should be expected to sign for their purchases, either on paper or using an electronic signature pad connected to your POS system. In addition, the name of the person charging should be typed in or selected from a list by the cashier. Even if your customer does not require this information on invoices or statements, having a typed name will be easier than deciphering a signature if there is a question or problem with a transaction later on.

Monitoring your receivables carefully will ultimately help your cash flow. Choose a day early in the month to make phone calls to past due accounts. Make sure you’ve applied any checks you’ve received up to the current day. Then, generate a Trial Balance to identify the past due accounts you need to call. Make a friendly phone call to each account with a past due balance. You might feel uncomfortable making these calls at first. However, you will quickly find that one “reminder” call to a customer can lead to many timely payments in the future. Document each phone call either in your POS system or in the paper file for the account.

Finally, keep in mind that AR represents your money, which you are allowing your customers to use. Extending credit is a risk, but it is also a helpful sales tool. For more tips on managing credit, check out this article from the University of Missouri’s Extension service.

Handling Multiple Facings with a POS System

Do you have new plan-o-grams coming from the June market? Did you order in a clip-strip assortment to do some cross-merchandising? These always look good at the market, until you’re back in the store trying to figure out how to manage one SKU on multiple pegs or in two different locations. From a logical standpoint, it’s tempting to eliminate the duplicate locations to avoid the inevitable challenge of managing the inventory in your POS system. Don’t give in! We are in the retail business, and multiple locations sell more product.

Here are a few ideas for handling items that have multiple facings and/or multiple locations:

1. For shelved items (i.e. motor oil), invest in some colored plastic strips that fit the shelf rail. For each SKU, cut a length of the material and install it where you are merchandising the product. Slip your bin label in on top of the material, and center it under the merchandise displayed along the plastic strip. Be sure to use colors that enhance your display and don’t clash with the actual product on the shelf.

2. A second way to handle shelved items is to use the same concept as in #1, but instead of using plastic inserts in the rails you can use white (or another complimentary color) electrical tape on the horizontal surface of the shelf, up close to the front rail. Center the bin label on the rail below the area that the tape spans, and spread out your merchandise along the tape.

3. For items that hang on multiple hooks or are merchandised in multiple locations, try using a small colored dot on the bin label to indicate the product has multiple locations. They should be inconspicuous to the customer, but serve as a flag to your employees that the item has multiple locations. This technique also works for overstock items.

Once you’ve developed a system that you like, train your employees to understand it and use it. Everyone who merchandises new items, stocks shelves, maintains the presentation on the sales floor, and counts inventory needs to be on the same page.

Do you have other ideas? Click the comment link below and share your thoughts!

If You Dislike CHANGE… You Are Going to Have a Hard Time Coping with Irrelevance

WE HAVE A CRISIS IN RETAILING TODAY AND IT’S ALL ABOUT CHANGE.

Maybe Charles Darwin, the great British Naturalist and author of the Theory of Evolution in the mid 1800’s, holds the key to our success. He said, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”

This week Rick Segel did a webinar on the power of Inbound Marketing and it made me think of the changes that have already occurred and those changes that are yet to be.

Read these facts and you might be in awe as well. Many of these are just subtle shifts in behavior that we have all become part of.

Check out the full article

Social media principles existed long ago

For centuries, humans have participated in 'social media' in one form or another. We've always recommended businesses or products and shared photos just in a different manner.

Harvard Business Review looked into the archives and found a 1966 study discussing the principles of "social media."

Now, the vehicle has changed. Without question, Facebook and Twitter make it easier to share and recommend certain products or brands, but social media principles have been discussed...at least four decades ago.

So, if it helps, realize that the vehicles have changed slightly (Facebook, Twitter), but social media has existed for centuries.

Get connected to gain POS expertise

Take a minute to think about how you and your employees gain product knowledge. Maybe you attend seminars once in a while, or even use a formal training program. Both provide an important foundation for learning, but there is no substitute for experience. Most of what you learn, both inside and outside of your store, comes in bits and pieces from your own experiences combined with the others’ experiences. Your hardware product knowledge grows each day as you solve problems with customers, and talk with vendors.

When it comes to your POS system, the situation is different. You might have a user manual, and hopefully you’ve attended some user group meetings at the Markets. At times you may contact your vendor’s support line if you have a specific problem. However, despite the fact that your POS system is the information backbone of your store, your knowledge doesn’t grow very quickly if you’re not connecting with other users.

The opportunity to connect is just one click away! There are numerous blogs and online forums that can connect you to others who may have the same questions you do, or who can offer their expertise in solving problems. On the other hand, you may hold the answer to someone else’s problem. Most importantly, it doesn’t take a lot of time. You can usually sign up to receive emails when there are new posts, so you don’t have to visit a web site regularly. You can read when you have time, and delete or ignore when you don’t.

Blogs and forums administered by vendors (like this one) are usually monitored by the vendor, and often times they will answer questions and participate in the conversation. Independent forums, such as the Hardlines Digest, deal with POS questions relating to many different systems along with other topics. You may have to be a customer to use some of the vendor-specific forums. Here’s a short list to get you started:

AgVantage Forum: Private vendor forum for AgVantage users

ARS Blog: Public Blog sponsored by ARS, mostly related to ARS system features

DBMS User Forum: Private vendor forum for DBMS users

Pacsoft User Forum: Private vendor forum for Pacsoft users

Hardlines Digest: Public forum, requires registration. Content covers all aspects of hardware retailing including POS systems. Recent posts relating to Activant and RockSolid POS systems.

Do you know of other online resources for retailers with POS systems? Click the comment link to share them!

Consumer behavior online

Pinpointing consumer behavior is like trying to catch a fly with chop sticks; however, occasionally, statistics provide insights.

Via comScore.com, Shop.org administered a study looking at consumer behavior and attitudes toward 'social commerce.' They broadly defined commerce to include not just purchasing, but also posting comments or conducting product research on a variety of social media sites.

It's interesting research and something to think about as you wade into social media.

- Brian Sonnenberg