The holiday season is fast upon us, which also means an increased risk of employee fraud and theft is upon us as well. It’s no surprise that restaurant owners tend to experience increases in theft and fraud as the pressure of the holidays arrives among their staff. Below are some suggestions we have that can help protect your restaurants:
Limit cash in the hands of employees. The more opportunities that are created for money to be taken, the more likely you are to be a victim of theft or fraud. When cash deposits are taken to the bank, make sure those deposits are verified timely and that they are cleared in a reasonable time. We have seen instances where employees hold deposits intended for the bank and then use the next day’s deposit to cover the amount they held from the day before (also called rolling deposits). In situations where cash from a deposit is needed, such as for petty cash use, always require the managers to keep detailed logs and to submit receipts to substantiate the expenses.
2. Change Orders
Change orders have become very common among restaurants utilizing safes and armored car pickup. In situations where change orders are processed through the smart safe, create a separate user so these deposits can be tracked separately from cash deposits. This will allow the reconciler of the deposits to easily identify cash overages/shortages separately from change order transactions. We also recommend aligning your business day cut-off times for the safe to align with the POS cut-off, so transactions are easy to match.
Inventory is one of the most accessible and easiest areas for employees to take from your business. Using a financial tool to determine inventory turnover can be a useful resource when monitoring employee theft. Inventory turnover tells you how long your product has been in inventory before it is sold. Make sure you know whether your purchases are aligned with your inventory. Ask whether the purchases are truly needed or is more inventory staying on hand than would be used in a reasonable amount of time. A good rule of thumb: total inventory value is typically equal to two average deliveries or less.
4. Promotions and Refunds
These are two areas that have seen increased fraud among employees. Be aware if you have large increases in promotion sales that do not coincide with any current promotional giveaways. Employees can also create fictitious voids or refunds and pocket the money. If you notice your restaurant has a high volume of refunds or voids after the register has been closed, this could be a sign of fraud/theft.
5. Bank Account Information
Keeping your bank account information confidential is key to preventing fraud. The more checks you issue, the more you risk accessibility to your account information. Whenever possible, set up utility and other common vendors for ACH draft rather than issuing checks. With regards to payroll, encourage employees to sign up for direct deposit or a payroll card service that most payroll companies offer. For employees who prefer paychecks, it’s always a best practice to have the checks clear through a payroll clearing account held by your payroll company rather than through your business account.
We are here to help you. Please reach out to your accounting professional if you have any questions.
Hillary Daniel is a Director on our Client Services Team. She can be reached at firstname.lastname@example.org. Janet Normandin is a Supervisor on our Client Services Team. She can be reached at email@example.com.