Detecting Loss from Cash Register
When we think of employee theft one of the first thing comes to mind is an employee stealing money from the cash register. Cash theft, stealing product or giving away merchandise to friends ("Sweetheart Cashiering") are among the top and traditional ways employees steal from employers. Over the years I have seen or heard of just about every type of cash register theft that there is.
To prevent or minimize the chance of cash theft from the register, an employer or supervisor should have several things in place to begin with:
First, have a written policy of cash handling. Make expectations clear that cash handling accuracy is the responsibility of the cashier. Have this written on a form and have the cashier sign it before beginning to work for the company. In this policy state specific expectations (see example below) with specific consequences for failure to control cash. This includes the register being over money which may be a sign of short changing customers. Use the phrase, "Violations of this policy will result in disciplinary action up to and including termination". This way you can use other forms of business disciplinary action but still reserve the right to terminate the person if you feel that it is necessary. The employee will have little, if any, recourse if this type of language is used.
Secondly, to ensure that you can legally and ethically hold the cashier responsible for their till, DO NOT ALLOW ANYONE OTHER THAN THE CASHIER TO HAVE ACCESS TO THE CASH REGISTER. This includes managers. This is the only way to eliminate others from stealing and making it look like the other cashier AND it is the only way to avoid defenses indicting others as the culprit of missing cash. Have the cashier "balance" their own drawer and double count their monies or have them witness a manager balance their till.
Thirdly, ensure that proper cash register training is provided at the beginning of the employees employment. Make sure that the employee understands that all forms of tender or cash register paperwork represent cash and missing any of them is unacceptable. Coupons, void slips, signed credit card transactions, checks, 'cash drop / pick-up' slips (when monies are removed from the register because there is too much money in the register), etcetera are all forms of cash and should be handled as such.
Some signs that a cashier may be taking cash and covering the missing cash with voids, coupons, etcetera:
To prevent the discovery of missing money, cashiers can use a variety of ways of covering the missing monies. A dishonest cashier can void sales to cover missing money, place coupons with the receipts to cover missing money, falsify cash pick-ups by changing the amount of money that was removed or "dropped" and short change customers and pocket the difference. Sometimes the money is taken out a little at a time, for instance, money can be removed from the register each time a coupon is placed in the register to cover the money. However, most of the time the money is taken out all at once near the end of a shift or before a lunch break. Here are some common and clever signs that the cashier is keeping track of how much to remove at one time:
- small sheets of paper with tally marks (each tally mark may represent $1 or $5)
- piles of items like paperclips that would not otherwise be out of the ordinary in a business setting or any stack, pile or gathering of other innocuous items that look unusual. Once again, each paperclip can represent an amount of money to be removed later.
- pennies in a "Take a penny, Leave a penny" cup or piled on the register (same idea as above).
How much cash deviation is too much?
That, of course, depends on your business and its tolerance for cash deviation. The best way to determine what is honest error and what is dishonesty is to run the cash register yourself or have a supervisor do it for a typical shift. Whatever their variance is is a good starting point.
Another way to establish a variance tolerance is to figure the average amount of cash handled per till over the span of a week and then figure a particular percentage that would be acceptable as a cash shortage or overage. I prefer one quarter of a percent (.0025). For instance, if your average cash handled is $549.00, then multiply that by .0025 to figure out what one percent would be. In this example, $549.00*.0025= $1.37. $1.37 would be the acceptable daily variance. Anything over or short more than this amount would be unacceptable. However, in this instance I would recommend rounding to a move understandable amount like $1 or $1.50.
Remember, some rolled coins (even from the bank) may be short causing the register till to be short as well. If a typical "round of change" (2-rolls quarters, 2-nickles, 2-dimes and 2-pennies) is missing one coin from each roll, then a register can be short 82 cents without dishonesty on the part of the employee.
** I recommend that your cash handling policy include a daily variance tolerance and a monthly or weekly variance tolerance. For instance:
"In the event that a cashier's till is short or over $1 or more per shift or if that cashier's weekly register variance is short or over $5 within a rolling week, disciplinary action up to and including termination will result".
These are good amounts in most cases since actual cash handling has declined in recent years as credit and debit card purchases have increased.
The best way of monitoring cashier performance:
In theory, most cashiers will experience about the same amount of cash handling, voids, honest mistakes, credit transactions, coupons, returns, etc. This means that, in theory, each cashier should have about the same percentage of each of these transaction types. Comparing cashiers, perhaps weekly or monthly, is a great way to determine who is operating outside the norm (normal curve) and POSSIBLY committing acts of fraud or theft.
You can figure out percentages of transaction type by dividing the transaction type (ex: voids) by the total amount of sales (transactions) for a particular register for any particular day. For example, Janey's register had total sales of $1,604.59. Her voids for that day were $168.50. Dividing $ 168.50 by $1,604.59 gives us a percentage of .1050 If all the other cashiers' percentage of voids are .00056% of their total sales, investigation into Janey's accuracy and honesty is needed. These percentages should be looked at on a monthly basis as Janey may have just happened to have a particularly large return that day.
**Care should be given here as a cashier who always works a register that is convenient for customers (by an exit or main entrance) may experience more returns and exchanges than other cashiers. Times of operation, placement of register, etcetera should be taken into consideration when evaluating cashier performance.
Other ways cashiers cause loss purposefully or accidentally:
- Giving unauthorized discounts to friends / family (Sweetheart cashiering)
- inaccurately ringing prices (guessing)
- human error (accidentally recording incorrect information, ex: prices, departments)
- returning items that are not carried by the store
- inaccurately ringing department or inventory / stock keeping codes)
- not recognizing price tag switching
- mis-labeling returns
- exchanging items (even exchange) for items of different price
- allowing "Short change artists" to defraud them
- mis-handling paperwork (voids, exchanges, etc)
- failing to include service charges (shipping, alterations, repairs, etcetera)
- accepting falsified receipts for cash exchanges (fake receipts)
- not locking / closing register when stepping or looking away
- not checking packaging or re-packed items during returns
- not being alert to potential shoplifters
- there are many, many others
-Allan
