Despite the advance of payment technologies, cash still remains one of the safest methods of payment. Cash loss however, is still a very real problem for businesses and one that continues to top the agenda for Loss Prevention, Finance and Operations professionals alike. Whilst your company may already have strict processes in place for controlling cash loss, can you really be sure that these aren’t in fact leading to a cover-up culture? So, ditch the zero-tolerance policies, stop asking staff to make up losses, and let me explain five key ways in which you can reduce cash loss across your company…
Cash loss is still a big problem for businesses
While some commentators argue that the cashless society is just around the corner, recent research suggests otherwise. A report by international payments industry expert Guillaume Lepecq shows that the demand for cash is in fact growing, and that digital currencies are unlikely to replace cold hard cash any time soon. Plus, with the majority of consumers still preferring to pay in physical currency, it seems as though addressing cash loss will still be a key concern for Loss Prevention professionals for many more years to come.
So why is cash loss such a big problem for businesses? Well, according to Global Retail Theft Barometer, the majority of shrink is now caused by internal theft. And most instances of internal theft now occur at the point of sale. Rather worryingly then in a retail environment, it’s statistically more likely that your staff are stealing from you more than your customers are – a bitter pill to swallow?
Below then are my five key tips for reducing cash loss in your business:
- Identify the cause: The first step is to identify the source of the cash loss. Are honest staff making genuine mistakes, or are dishonest staff taking advantage of fractured processes? Identifying trends in your cash loss can help identify the cause. Does cash loss happen on specific days? At specific hours during the day? Or even in $10 or $20 increments? Once you fully understand the cause, you can take the next step towards combatting cash loss in your business…
- Tighten up processes: What are the thresholds for when losses are investigated? How are losses escalated? What targets are in place? If you can’t answer these questions, you may need to take another look at your cash loss procedures. Make sure that you lay out the expectations at cashier, store and corporate level and provide clear guidance on how an instance of cash loss should be addressed. Avoid zero-tolerance polices if possible. While it may seem on paper as though these policies eliminate cash loss, they will inevitably just end up concealing the true extent of losses.
- Break the cover-up culture: Discourage the use of slush funds or any other “shortcut” that employees use to cover-up losses. Even well-meaning staff who regularly make up losses from their own pockets could actually be perpetuating a cash loss problem in your business. When cash loss is covered-up, no matter how good the intention, it masks the real issue; internal theft goes un-reported, and perpetrators are free to continue under the radar.
- Defend against cash scams: Your staff are your greatest weapon in the fight against cash loss. By ensuring that they are trained to be aware of common cash scams and how to avoid them, you can keep your cash exactly where it should be. Don’t forget to constantly refresh the training programme though, as thieves are becoming increasingly innovative. And it’s not just the professional con-men that staff now need to watch out for. The internet is a breeding ground of forums showing exactly how to pull off effective change scams – meaning that anyone and everyone now has the potential to successfully defraud a cashier.
- Use technology to eradicate cash loss at source: Okay, so maybe eradicate is a bit strong. We all know that achieving a 0% cash loss rate is likely impossible long term. Your staff are only human after all. That being said, there is a strong case for implementing cash management technology across your business to help all but eliminate cash loss. Intelligent cash drawers (SmartTills) for example can identify when a transaction error occurs in real-time, allowing the mistake to be corrected immediately, at source. So, the days of staff handing back the incorrect change can now be a thing of the past. Plus, with transaction by transaction reporting you can easily identify which staff need extra training, or worse, which ones are actually stealing from your business…
Reducing cash loss then is not as straightforward as simply implementing zero-tolerance policies. While this may stop cash loss metrics appearing on your balance sheets, it’s unlikely to stop theft from your cash drawers. And even though it might seem counter-productive, encouraging staff not to make up losses from their own pockets will help you identify and address the true cause and extent of cash loss in your business.