Stopping theft from your pockets

Jan. 1, 2020
Last month, I wrote about the problem of loss and theft as it pertains mostly to vendors.  But there is a bigger problem area which most of you are already probably aware of: employee theft.

Last month, I wrote about the problem of loss and theft as it pertains mostly to vendors.  But there is a bigger problem area which most of you are already probably aware of: employee theft.

Like this article? Sign up for our enews blasts here.

Loss due to employee theft is perhaps the biggest issue facing most owners on a day-to-day basis. Every time I speak to another owner, it’s one of the most asked questions I get. Unfortunately, there are no easy solutions. Employees have stolen from you in the past, they will again in the future, and the best you can do is implement systems to help mitigate your losses. Oh, and cameras alone aren’t the answer.

One thing to keep in mind is that cameras almost never catch a thief. They normally only prove something was stolen. It’s rare when a camera actually prevents an employee from stealing. Placing a camera over your registers might lower your cash loss, but what about all those places where you don’t have cameras?

Set Expectations
Employees will be less likely to steal if you clearly communicate the policies and practices you’ve established to prevent employee theft. The zero-tolerance policy on theft that we take at my shops is spelled out clearly in our employee manual. At the same time, we also encourage employees to report theft and provide an open door for employees to talk to supervisors, managers and regional managers about any concerns they might have without fear of repercussions.

It’s also wise to inform your staff that you conduct regular audits to check on inventory, deposits and other key areas where loss is more likely to occur. Perhaps most importantly, consider adopting specific guidelines for the areas that worry you most. If you’re concerned about bank deposits, outline who can deposit money and what type of paperwork those employees need to document that process.

Another big issue is side jobs, so I don’t allow employees to perform “off the clock” work at my shops. Every car that comes through our shops must be checked in through the front counter. I don’t want the liability involved in those off-hour jobs and I don’t want parts being put on those cars that I can’t account for later.

Finances
Bookkeeping is the single biggest area of theft for most shop owners. It’s where the big money is lost. A friend of mine worked with a bookkeeper for more than 20 years before he found out that she had stolen more than $150,000 over the years. She would deposit the credit card receipts and the checks, but would keep the cash. 

It’s fine to trust your employees; I just think it’s always wise to verify that they are doing their jobs properly. Here are some strategies to help prevent accounting-related theft:

• If you have just one bookkeeper, you, as the owner, should have check-signing authority. That way you see and authorize all outgoing payments. Another option is to require double signatures for checks over certain dollar amounts.

• Avoid hiring a family member or friend of the family to serve as your bookkeeper. The reason is that your natural tendency will be to trust this family or friend because of your relationship. You need to have a bookkeeper who will not be offended if his or her work is inspected on a regular basis. You’re checking for errors, not just theft, and good bookkeepers will be open to having you review the books because they want to keep mistakes to a minimum.

• Verify that you’re paying your payroll taxes. It’s easy to assume that your bookkeeper is handling this task, but if that individual is not, it might be months before you discover it, and that could lead to huge penalties.

• Check your financial records against your deposit receipts. Confirm that what was supposed to be deposited was actually deposited into your account.

• Never have a single person be responsible for all of your bookkeeping. Retain an accountant to do regular audits. This keeps your bookkeeper from being tempted to steal and also keeps your business on solid financial ground. 

When it comes to finances, you should also consider a check verification service. The money you pay for a check verification service is well worth it considering the amount of money they will save you in the long run, guaranteeing that the funds are there for the checks you accept.

Check, Then Check Again
Last, but not least, consider employing audits to prevent employee theft. I have my regional managers conduct an audit once a week that includes checking everything from inventory counts to the cash in the drawer. These audits take no more than an hour and can help ensure that your technicians, bookkeeper and management are in compliance with your policies and procedures.

Some of the tasks on the checklist include:
• Inventory counts. There’s too little time in the day to count everything in your shop, but conducting a basic inventory of anything worth more than $10 will make a world of difference. I remember working with a shop owner who told me his staff was completely trustworthy. The shop owner said he had about $30,000 worth of inventory in his stockroom. But when he actually looked at what was on his shelves, he only had about $8,000. That is a massive difference and accounts for a nearly $22,000 loss. This shop owner never did counts, so he never knew exactly what he had in his inventory, and what was disappearing off his shelves. If he had just checked regularly, he would have been aware of his losses and could have taken measures to prevent any theft from continuing.

• Requiring repair order numbers. When I order parts, I always give the vendor an RO number that will match the car the part is meant for. Using an RO (or PO) number lets your vendors know that you will only be responsible for parts ordered that you can verify by RO. This helps prevent employees or ex-employees from purchasing parts on your account.

• Without that check in place, employees can easily order parts on your account and you’ll have no way to track where those parts went.

• Counting the number of cars in the parking lot. This may seem like a silly item to track, but if you see cars that don’t belong to customers in your system or employees, chances are your technicians are taking on side work. I bought a shop last year in a great location that was somehow not making money. When I dug deeper, I found out that the techs were working side deals with customers, shutting out the shop owner. That greed eventually drove the shop out of business.

• Verifying your cash. My shops always keep $150 in the drawer to make change or to fund small purchases. While keeping that cash on hand is necessary, it can also be tempting for employee who might be broke and think no one will notice if $50 is missing. At our shops, that drawer is counted as part of the audit checklist and if it comes up short, the general manager is responsible for making up that shortfall.

If you’re interested in obtaining a copy of the audit checklist I use in my shops, simply email me at [email protected] and I will send you a copy. The list doesn’t cover every avenue of protecting yourself, but it does encompass about 90 percent of the areas where you’re most vulnerable.

Overall, proper management procedures are mission critical. Remember, bad people will not steal from a company that is really on top of its systems. Thieves will go somewhere else where it’s easier to get away with theft.

Subscribe to Motor Age and receive articles like this every month…absolutely free. Click here

Sponsored Recommendations

ZEUS+: The Cutting-Edge Diagnostic Solution for Smart, Fast, and Efficient Auto Repairs

The new ZEUS+ simplifies your diagnostic process and guides you through the right repair, avoiding unnecessary steps along the way. It gives you the software coverage, processing...

Diagnostic Pre- and Post-scan Reports are Solid Gold for Profitability

The following article highlights the significance of pre-scans and post-scans, particularly with Snap-on scan tools, showcasing their efficiency in diagnosing issues and preventing...

Unlock Precision and Certainty: TRITON-D10 Webinar Training for Advanced Vehicle Diagnostics

The TRITON-D10 lets you dig deep into the systems of a vehicle and evaluate performance with comparative data, systematically eliminating the unnecessary to provide you with only...

APOLLO-D9: Trustworthy Diagnostics for Precision Repairs

The APOLLO-D9 provides the diagnostic information and resources you need to get the job done. No more hunting through forums or endlessly searching to find the right answers. ...

Voice Your Opinion!

To join the conversation, and become an exclusive member of Vehicle Service Pros, create an account today!