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IIheonu Nkechi Gloria 3 years ago
My office manager, Karen, sat with a new restaurant client. Ten minutes later Karen was in my office with the financials of the client.
“She doesn’t understand why she is losing money, boss,” Karen said. “She says business is good, but she loses money every month.”
I looked at the profit and loss statement for less than ten seconds when I asked Karen, “Is this correct?”
Karen named the bookkeeping firm the client used. It was a reputable firm. Karen said the client reported all income daily and reported it to the bookkeeper. The bookkeeper paid all the bills and provided a statement each month.
If the P&L was correct there was only one explanation. “One or more of her employees is embezzling.”
“Can you talk with the client?” Karen didn’t know what to tell her.
I went to Karen’s office and explained to the client she had at least one employee embezzling.
“How do you know?” she asked.
I held up the P&L. “The cost of goods sold compared to wages compared to revenue is off. Someone is either walking out the back door with steaks and seafood or someone is stealing cash receipts.”
The client assured me she had honest employees. With only a glance at her financials, I was certain there was malfeasance.
“It might be a waitress. Do people leave money at the table or take it to the checkout person?
“Checkout person.”
“Okay, it probably isn’t her because the amount is too large. And while steak and seafood might be walking out the back door, the cost of goods sold is somewhat in line with employee wages. It is revenue that is off.
“So tell me, do you have a security camera on the cash register?”
She told me she had no security cameras.
“The employee at the cash register might be the problem.
“No,” she said. “That employee has been a friend since we were in kindergarten.”
That was all I needed to hear. With rare exceptions, embezzlement comes from people you trust the most. Either a family member, close friend, or faithful employee who hasn’t taken a vacation in eight years. There is a reason accountants demand business clients require anyone in their business handling money to take a two-week vacation every year. You would be surprised how much embezzlement is uncovered when someone is on vacation.
“Your friend is robbing you blind,” I confirmed.
She still insisted her friend would never steal from her.
“Okay. This is what I want you to do. Go back to your restaurant and call a meeting with your employees. Tell them your new accountant is a real a-hole and demands a security camera be placed over the cash register.”
She did as I asked. Her friend since kindergarten quit on the spot. And profits arrived for the first time at her restaurant.
Unfortunately, the theft had gone on for too long and the financial damage too great. A year later she closed her restaurant, deep in debt.
Credit: Wealthy Accountant
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JJasica 2 weeks ago
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