Old school methods for detecting losses of cash sales in retail outlets involve random cash counts and catching thefts. Today, with the advent of electronic point-of-sale (POS) implementation, simple theft has evolved to various and more sophisticated fraudulent means.

Hence, prevention and detection methods must also evolve to intelligently respond to these threats.

Here are some of the most common fraud methods in retail and effective ways to prevent or detect them:

Non-recording or voiding of sales. Your staff pretends to ring in a sale to your POS and voids it later, taking cash proceeds with him. Worse, the staff gets away with not ringing in the sale to the POS, leaving no trail of the transaction and cash receipt. To detect this, look for an increased pattern of voided sales done by some specific personnel. Also, check for unusual drops in sales per staff during certain hours of each day. As a preventive measure, incentivize customers for demanding receipts at the point of transaction (i.e. If no OR is issued, your meal is on us!).

Extension of discounts. Your staff extends discounts to a transaction and takes the change. The customer may be an accomplice of your staff or someone who doesn’t take time to check the receipt details. As usual, this can be detected by an increased pattern of excessive discounts done by some specific personnel.

Fictitious sales returns and refunds. An accomplice “customer” is usually needed in this type of scenario. Your staff allows refund of goods that were never actually sold. Normally, the physical item must be presented as proof that there was a valid sale. This is not particularly doable in consumables like food & beverage as the customer may claim to have consumed the goods before prompting them to raise a refund request. With this, refunds without physical items must be flagged and investigated further. Plus, watch out for unexplained reductions in inventory as they may be stolen and then damaged to justify a cash refund.

Sadly, most small to medium business owners are aware that these fraudulent means exist but decide to live with it.

With hundreds of transactions per day, it’s admittedly hard to keep track unless:

  • You hire a dedicated person to look at these transactions (still, subject to human error or oversight), or:
  • Invest in analytics tools that would highlight unusual transactions and enable you to monitor anytime, anywhere, and with any device.

Investing in available technology solutions will not only easily detect fraudulent transactions, it will inevitably take your mind off these operational dilemmas.

These solutions will instead allow you to identify and keep qualified, trustworthy personnel in your organization and empower you to focus on growing your business to greater heights.

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How can we help? Accelerating your analytics journey is the core objective of RAPID INSIGHTS ZONE — premium analytics professional services, made available to all business types and sizes. Our services will help you KNOW MORE (about fraud, among others) through analytics, so you have MORE TIME and resources to focus on growth. If you are scouting for systems that will help you achieve real benefits, don’t just assess and validate the systems features. Seek the background and kinds of people behind the development and delivery of the systems. When you are ready to accelerate your analytics journey and inevitable business transformation, contact us!

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