CSP Exclusive Study: Hard to Handle

Effectively controlling cash top concern for retailers in study

Erik J. Martin, CSP Correspondent

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Rob Razowsky, president and CEO of Rmarts LLC in Deerfield, Ill., which operates five c-stores in the Chicago area, says his stores use a smart safe/cash service system inaccessible to employees that involves currency being picked up twice weekly. “We have a pretty good system with our bank that allows our managers to drop off deposits for same-day credit, subject to count,” he says.

Some cash-handling inefficiencies can be attributed to a lack of proper oversight and bookkeeping, according to Lee Erickson, president of VRX Co., Inc., a Maryville, Tenn.-based provider of loss-prevention solutions.

“Many operations may still be using simple paper-based bookkeeping and accounting systems such as end-of-day reports and end-of-month reports printed on paper tape,” Erickson says. “These store owners may not be asking questions of their accountants about how they can get reports transferred electronically so that humans and paper are not used for such transfers.”

Another factor is concern among operators of automated equipment, because coin-counting safes, change dispensers and bill validators break down, says Tim Lindblom, vice president of Gulfcoast Software Solutions LLC, a Clearwater, Fla.- based manufacturer of cash-management software.

“There is a perception by some convenience retailers that the advanced safes are unreliable and expensive to maintain. Initial capital expense plus ongoing cost of ownership concerns drive down deployment in the market,” Lindblom says.

Disappearing Dollars

For the second consecutive year, internal theft of cash placed second on the survey’s list of most serious cash handling/management issues.

To combat internal theft, Kevin Bahnam, president of USA 2 Go, a four-store operator based in Wixom, Mich., says he employs old-school tactics that remain effective. His employees log in every transaction on a chart that is checked against register receipts. The accounting paperwork is turned over to the next clerk during a shift change. Store managers spend extra time weekly reconciling all of these reports with a bookkeeper who scrutinizes every ledger line carefully.

“We’re not a big chain with ample resources and capital to invest in the latest (cash management) technologies,” Bahnam says. “But being a small independent operation is actually an advantage in this situation because we only have a handful of stores. That means we can keep a closer eye on things.”

Even if you’re a small independent operator, Bahnam says, there are steps you can take to limit shrinkage. “Run background checks on every employee you hire, and try assigning designated registers to particular clerks so that you can more easily track their activity at one set location,” he says. “Also, create customized shift sheet logs that require employees to document every transaction.”

Bob Ivey, director of loss prevention for the 291-store E-Z Mart Stores Inc., Texarkana, Texas, says internal theft remains a concern. To curtail this threat, the chain requires extensive shift reporting involving careful online spreadsheet logging of departmental sales; every clerk’s sales are weighed against that of another clerk on a similar shift to spot any negative trends or major discrepancies.

“Our company is really big on accountability,” says Ivey. “We think it’s important to let our employees know what we know and to adopt a proactive vs. reactive approach.”

Looking closer at the survey data, Rhoads sees a silver lining in the fact that cash shrinkage has dropped in seriousness among respondents by 9 percentage points from 2013. “However, there’s always going to be an opportunity for employees to steal, and shrinkage will always likely be high on this list,” he says, “so it’s time for new innovations and approaches to combat this problem.”

Counterfeit currency was selected by more respondents this year than last year as a serious issue (31% in 2014 vs. 26% in 2013), placing it at No. 3 on the survey.

Bahnam isn’t surprised, linking counterfeit currency’s rise to the economy: “While the U.S. economy is rebounding, there are still many people out there trying to get ahead of technology and develop new ways to cheat the system. We typically see more issues with attempt to pass phony bills at our stores around the holidays. But we always check $50s and $100s with an [invisible ink] pen.”

Cash-Handling and Management Issues Most Serious (1 Store vs. 2 or More Stores)
Inefficient cash handling (employee productivity loss: counting,recounting, reconciling discrepancies, making bank deposits) 65% vs. 73%
Cash shrinkage (internal theft) 49% vs. 59%
Counterfeit currency 30% vs. 31%
Inability to track cash flow between POS and safe 26% vs. 12%
Lack of information for cash forecasting 22% vs. 10%
Bank deposit discrepancies (fees, time and effort resolving) 18% vs. 30%
Robberies and/or burglaries 18% vs. 28%
Cash exposure (cash not held in a business-rated safe) 16% vs. 15%
Inability to transfer data between safe and back-office systems 16% vs. 14%
Lack of detailed safe transaction data to resolve cash discrepancies 10% vs. 11%
Safe not linked to bank allowing for provisional credit 8% vs. 12%

Source: CSP/Corporate Safe Specialists/FireKing Security Group 2014 cash management study

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