5 Ways to Protect Your Retail Business from Fraud
As is often true, an ounce of prevention really is worth a pound of cure. Devising ways to deter fraud in all its forms will go a long way toward mitigating your risks. Like the Boy Scouts always say: Be prepared! It's imperative that you plan for disaster, whether man-made or natural. A little effort in preparing for a range of potential threats will go a long way in the recovery of your business and your ability to quickly rebound and serve customers' needs in a time of crisis.
Here are five ways to protect your retail business:
1. Have a written employee handbook, including an ethics statement; update it, enforce it, and have all employees sign that they have received a copy, read it and understand that failure to abide by it will be grounds for termination and possible prosecution.
2. Have a formal policy of separation of duties, strict supervision, voucher accounting and all relevant internal controls to be enforced at all times.
3. Set up employee training to check for signs of shoplifting. Reconcile shipment records with sales invoices and inspect the perpetual inventory records.
4. Educate employees on how to recognize phony checks, how to insist on valid IDs, and how to examine and verify them.
5. Conduct an analysis of financial statements to mine for margins, turnover rates, increases in costs of goods sold and delinquent receivables.