How Does POS ERP Prevent Theft or Fraud?
A point of sale (POS) software system carries out sales transactions, typically in the retail and hospitality industries. There are so many incredible benefits of POS ERP (enterprise resource planning) software, one of which is the prevention of theft and fraud. Here’s a look at how this is achieved.
What is POS ERP?
A POS system is a modern and efficient method of recording sales and tracking all financial transactions within a business. A POS system is able to ensure all your operations are working seamlessly, with additional features for enhanced customer experience and a productivity boost.
What is Employee Theft?
This is any form of misuse of employer assets, or outright theft of items while in the organisation’s employ. In many industries, theft of employee assets is much easier than theft of cash. A POS ERP system can assist in reducing – and often eliminating – them both.
– The Cost of Employee Theft
According to the US Chamber of Commerce, around 75% of all employees steal at least once, and many of those steal repeatedly from work. This translates to more than $50 billion of annual losses, simply through employee theft.
Statistics issued by the American Society of Employers indicate:
- Employee theft results in losses of around 20% of overall profit.
- 55% of the perpetrators are actually managers.
- 20% of employees are aware of fraud in their companies.
- 75% of employee-related crimes remain unnoticed.
What Security Measures Does POS ERP Offer?
These statistics, while reflective of the U.S., are indicative of an underlying issue that impacts businesses on a global scale daily – in-house theft. This has prompted businesses to research effective methods of fraud and theft prevention. Fortunately, in the modern age, there are many ways that businesses can leverage technologies to create effective security measures that deter and prevent theft.
One of the best technologies that can achieve this is POS ERP which has a number of innovative features that make theft and fraud that much more difficult. If you’re working with an existing POS system that is somewhat out-of-date, you might want to consider upgrading to the latest software options. These are designed to close the loopholes exploited by fraudulent individuals.
Here’s a look at some of the security measures you can enjoy with POS ERP.
– Cash Tracking
Cash is still the most frequently stolen item taken by employees, particularly cashiers who deal with money on a daily basis. With older POS systems, it was a simple case of removing cash from the till. However, modern POS software can easily track employees’ actions and pick up any discrepancies.
One of the most common practices exploited in retail business is the ‘void out sale’ or ‘no sale’ option. What happens is a buyer changes his or her mind at the point of sale because of insufficient money, incorrect sizes or simply the wrong item selected. The transaction then needs to be cancelled. However, certain employees can take advantage of this cancelled transaction by not returning the item to the shelf or taking out money when the till opens.
With POS ERP, the software prevents the till from opening and can track the reasons for the void out or no sale option.
Other cashier activities that you can monitor with the POS application include:
- Price changes
- Removing items from orders
- Security violations
- Time clock changes
– Inventory Tracking
Certain POS ERP systems are so sophisticated they can monitor and track inventory and sales data thereby picking up any anomalies. In fact, inventory theft is one of the most common ways employees are able to steal from businesses, which is why it needs more effective monitoring.
The POS software tracks inventory that is both coming into your store, and going out of your store. It also indicates where the inventory item is in the store at any given location. If, for example, inventory is suddenly going missing from back-of-house, it’s likely to be an issue with employee theft. Other features on your POS, such as sales reporting, can also optimise operations and minimise theft.
If your business allows customers to have a credit or run a tab, with payment made in cash, then you’re often susceptible to employee theft. This is because the employee can pocket the cash yet process the payment on a credit card.
With an integrated POS system, you will be able to trace each and every transaction including who managed the sale. This way, if any discrepancies emerge in a transaction, you can address the employee directly. The knowledge that your POS has integrated payments in itself will also act as a deterrent.
– Security Clearances
Often the easiest way to minimise the threat of theft is to limit the number of people with access, or only allow access at certain levels within the system. Thanks to modern POS software, you can give security clearances to your higher-level employees so that transactions such as void outs require proper authorisation. This hierarchical approach has proven results in minimising theft and fraud within organisations.
– POS Mobility
The POS can be a mobile system (mPOS) and this flexibility in movement can actually be used to address theft. Where older POS systems required your cashier to remain behind the counter, modern POS means employees can roam the floor, engaging with customers and allowing the transaction of sales. This means an enhanced customer experience, as your merchants are that much more attentive, but also increased security as there are no hidden spots for shoplifters.
– Preventing Discount Abuse
In the retail and hospitality industry, many employees are afforded discounts on food or retail items to encourage sales. However, rather than simply using discounts for themselves, they often allow family and friends to take advantage of this privilege or give extras to preferred customers. Modern POS systems can alert business owners to any discrepancies in discounts, as well as allowing a review of discounts given.
– Regular Audits
All these POS features allow you to conduct regular audits of your business transactions, monitoring everything from inventory movement to cashier activities. You’re receiving daily updates on what is actually happening on the ground, and can quickly identify and rectify discrepancies and problems.
Other Measures to Prevent Employee Theft
In addition to investing in the latest POS ERP software, there are other practical measures you can adopt within your organisation to minimise or prevent employee theft and fraud. These include:
– Screening all new hires
Hiring the right person the first time makes all the difference, but this is not always possible. However, the more thorough you are in screening a new hire, the lower the risk of hiring the wrong individual who could cost you greatly later on.
The first step is always performing background checks on employees, although these will only turn up any convictions, rather than warnings at previous jobs. This means checking in with references and previous employers so that they will share more insights into the potential employee’s character. Checking the employment timeline is also an effective way to pick up on any areas of concern.
– Draft a digital policy
With most companies operating in a digital space, security on this platform is also really important. This will keep employees safe when browsing the internet, as well as preventing data leaks and other security issues. A digital policy offers employees guidelines on acceptable online behaviour, and will also allow for the monitoring of networks so you can identify cases of theft and fraud.
– Develop internal security measures
In addition to a digital policy, you’ll need to outline internal security measures that protect your assets. This could include:
- Updating passwords and log-in credentials on a regular basis.
- Installing biometric access wherever possible.
- Restricting access to sensitive areas, documents and records, monitoring who can access, when and why.
- Installing CCTV cameras that monitor employee activity, particularly where inventory and cash is concerned.
- Keeping all valuable items securely locked away.
– Watch for warning signs
Training your management and internal security in identifying the warning signs of theft and fraud will also minimise risks. Some of the signs that indicate a high risk of theft are:
- Unusual or unexpected behaviour at work.
- Financial troubles with any employee, which in the current climate is an ongoing concern.
- Any underlying issues related to drug or gambling addictions.
- Disgruntled employees who consider themselves overlooked for promotions.
- Employees who have gone through disciplinary procedures.
It’s really important to create a work environment that is communicative and supportive so that personal issues don’t snowball and impact work as well. Counselling and open channels of communication, particularly in these times of heightened anxiety, can make employees feel more appreciated and recognised.
For the best in POS ERP software, contact Omni Accounts for industry-leading solutions that will streamline operations while targeting challenges such as in-house theft and fraud. Omni consultants will be able to tailor an industry-specific POS solution that meets your retail needs.