How much do companies lose due to fraudulent activity every year? How much of this lost cash do retailers and hoteliers even know about? Employee theft, payroll fraud, or embezzlement impact profitability and undoubtedly foster mistrust, tainting company culture. Here is what you need to know about fraud in the hospitality and retail industries:
• “Shrink is a growing problem for retailers, costing $123.4bn annually,” according to the 2015 Global Retail Theft Barometer, “For the U.S. in particular, employee theft is the leading cause of retail shrinkage.” Employee theft is amounting to billions of dollars annually. This research indicates that employee theft is at its statistical peak in the retail industry. By being aware of this reality, business owners and managers can make well-informed decisions regarding company policy and determine what internal changes may need to occur to prevent this activity in the future.
• Corporate Compliance Officer of Pinnacle Entertainment, Ron Reigle identifies “payroll fraud among today’s top vulnerabilities for hospitality management.” The negative effects of payroll fraud are extensive, hindering employee’s earnings as well as the overall profit. In such cases, company culture often suffers as well, causing employee dissatisfaction and internal conflict among co-workers. Acknowledging the areas in which businesses are susceptible to payroll fraud and actively working to eliminate the potential for this activity is crucial.
• According to a 2013 Tufts University Study, “Forty billion dollars are lost to cash theft each year, prompting company owners to invest in security cameras and safes.” Over the last few decades, a number of embezzlement and theft cases in the hospitality industry seem to point out the particular challenges and risks of cash handling within the industry. Oftentimes, security cameras and safes are not enough when it comes to these instances. In order to effectively address and eliminate embezzlement and cash theft, greater transparency and organization of the cash handling process is necessary.
To combat the billions lost from fraudulent activity every year, business owners must understand the particular vulnerabilities and work to eliminate any potential for the occurrence of fraud within the industry. Theft, payroll fraud, and embezzlement substantially impact businesses, costing companies and organizations large sums of profit and income. Nevertheless, automated cash and gratuity management systems offer the level of security, transparency, and process organization required to accurately manage the complexities of hotel and retail cash and tip processing.