For most business owners, it’s a major milestone when they can afford to hire their first employee.
Finally, they’ll get some extra help around the store, so they’re freed up to handle other important tasks.
Often, this new employee is in charge of ringing up sales.
Unfortunately, that employee could easily cost you more than their hourly wage if they begin skimming.
What Is Skimming?
Skimming is when your employee works the register during a sale and pockets the customer’s cash.
There are three main ways the thief may do this:
1. Short-Term Skimming
Sometimes, they do this with the full intention of “repaying you” later. For whatever reason, they need that money right now, so they take it. They know that if they replace it before you do the accounting, you won’t be any the wiser that you gave them an interest-free loan.
2. Skimming Through Unrecorded Sales
Of course, many of these employees are free of any interest in putting the money back.
Instead, they’ll take the customer’s money and, if necessary, give them change as usual but never actually record the sale. The customer walks out the door with their “purchases,” even though they never received a receipt.
This might seem relatively easy to detect. Once you check your inventory, you’ll notice the unrecorded item(s) in question.
But how do you know it wasn’t just a shoplifter?
A traditional thief would have the exact same effect on your inventory levels.
3. Using Their Employee Discount
However, your inventory could show no red flags even though an employee is successfully skimming from you. That’s because they’re retroactively applying their employee discount to customers’ purchases and keeping the difference.
The sale is accounted for like normal, your inventory levels are accurate, and your employee is getting a regular bonus you know nothing about.
How to Put an End to Skimming
You’ve already taken one of the most critical steps toward outsmarting skimming: you now know how it’s done.
Here are three ways to put an end to it:
1. Count Your Cash Daily
This can seem like a chore sometimes, especially if you’re a small business owner who already has enough on your plate.
Still, if you count your cash every day and, just as important, your employees know that you do, this will prevent those interest-free loans we covered earlier.
2. Go Through Your Inventory at Random
While you should take regular inventory counts, do it at random throughout the week, too. This will help you catch unrecorded sales a lot sooner.
It’s also another good deterrent as your employees will know they can’t time their skimming efforts for right after your count, giving them the best chance of alluding detection.
3. Track or Limit Employee Discounts
If you notice one employee is using their discount a lot more than others, that’s a warning sign.
You could consider limiting the number of times an employee can use their discount. If you limit how much they can spend with their discount every month, that may help, but a skimming employee will most likely just see that as an invitation to steal that amount.
Although you might be busy, if you insist that you have to be the one to ring up employee discounts, this will extinguish the problem completely.
Do You Suspect Someone Is Skimming?
Ideally, you want to hire people who won’t skim, but that’s a lot easier said than done.
Instead, take the proactive approach guided by the practices we just discussed. Make sure employees know that, if they do skim, they will get caught.
If you need someone to review your books because you’re worried about skimming or would like to use our accounting services to ensure no one decides to do it in the future, Marshall, Wazcheka and Patrick, CPA is here to help.
Contact us today and let’s talk about why you think someone might be skimming and the process we’ll use to find out for sure.