FLORENCE, AL -- It's always unfortunate when a thief breaks into a machine on location, but the costs are easily calculated and the loss often absorbed without undue strain. The same cannot be said when theft occurs internally. Losses caused by larcenous route personnel are far more costly than those caused by vandals. Even small thefts can substantially affect the bottom line in the long run, if not detected in time. The handful of quarters grabbed out of the collection bag to pay for a fast food meal adds up over months and years.
To prevent such thefts, bookkeepers for bulk vending operations need to perform double duty as forensic accountants, assuming the roles of both bookkeeper and detective. It was a team of eagle-eyed accountants that brought the famed and feared gangster Al Capone to justice.
"I always watch for increases and decreases in collections over a period of time," said Pamela Owens, administrator and cash manager for Capital Vending & Distribution of Florence, AL.
Essential to this scrutiny, Owens explained, are good cash management systems and bookkeeping practices in the back office. At Capital, cash is brought back to the office and the totals keyed into a route management program. A comparison is routinely run against the previous month's collections.
"The collections should be consistent each month -- within $10 to $15 or so," Owens said. "When there are differences among monthly collections, it raises a red flag that possibly there is theft on the route."
Capital's route drivers count money by rack using a scale on site. Moneybags, with sales tickets, are counted again back at the office and the sum is compared against sales tickets before entry into the computer. Onsite count-and-record procedures not only provide an accurate tally, they also give the location managers an idea of the size of the commission they will receive by check, Owens said.
(In the past, bulk route drivers refilled machines on their routes from plastic bags full of product, simply adding enough to a machine to restore it to a "looks-full" condition, and then tying off the bag and throwing it in the trunk until they got to the next similar machine that needed product. As a result, there was no way to accurately match up the number of bags that went out with the value of the collections brought in. And many operators bagged cash by route, and some still do.)
Another signal that something is amiss is a mysterious increase in product sales without a commensurate rise in collections. This could be a tipoff that someone is stealing product, not money. It's a common-sense clue, but one that is often overlooked by operators who tend to review cost of goods sold and collections independently.
"Generally, most people in vending think that theft occurs with cash, but the inventory is just as easily targeted as the money," Owens explained. "The cost of goods is very important to our bottom line. If cost of goods is high, then we start looking at the amount of product being used."
In addition to keeping a close eye on the books, Capital Vending takes a variety of theft-prevention measures. These include carefully monitoring machines in the field, which is a cornerstone practice at Capital. "We add money to the cashbox," Owens said. "So we know what is in the machines, and if that amount does not come back to the office."
Most importantly, suspicion of theft does not mean immediate termination of the suspected employee. After all, even the most scrupulous bookkeeper can make errors. However, suspicion does trigger an additional investigation at Capital. "We generally try to come up with a secondary method to confirm the theft," Owens said. "Without another method, we are skeptical of our own initial findings."
Methods to confirm theft or clear the employee vary, but Owens and other members of Capital's management team have put into place a few that seem to work. One theft confirmation method, she noted, involves changing the routine for collections or handling merchandise. The new routine is designed to provide greater accountability in direct conflict of the suspect.
"Usually, if someone is stealing, they do not like the changes because they are afraid of being caught," she said. "When new systems are put into place, negative attitudes tend to come out. They usually have a problem with the new systems. They 'forget' a new assignment or continue to operate in the old way, which definitely draws attention to them and their job performances."
It is apparent that operators need to remain vigilant against theft. In route operations of any size, vendors cannot rely on "trusting their gut" or their abilities to judge people during the hiring process. As Owens pointed out, some pilferage is not even viewed by the perpetrator as "theft" at all; he might simply regard the cash as loan to be paid back over time, or an informal fringe benefit of a free meal while on the road. But even small amounts can add up quickly.
"If a person gets away with it the first time, they generally think that they will not be caught, so they continue to steal," Owens cautioned. "But with the right systems in place, a thief will be caught. Sometimes it does take longer than expected, but they'll get caught."