“UK Finance predict that by 2026 cashless payments will be so popular that just 21% of all transactions will be made in cash. It all looks promising, yet as the industry edges closer towards the creation of a completely cashless society, it would be unwise for operators to jump on the bandwagon assuming they will now be free from all troubles and losses.”
– Malcolm Muir, Consultancy Director, Venners
Contactless technologies influence the way you safeguard your business
By Malcolm Muir, Consultancy Director – Venners
The sharp increase in the rollout of contactless technologies like ordering apps since the start of the pandemic, continues to evidence the wider trend towards cashless payment systems in hospitality. Where faster payments, secure transactions and better data collection were already great reasons to migrate, government guidance, which discouraged cash handling for the sake of customer safety during the pandemic, may have been the tipping point for many businesses to join the already enticing cashless trend.
UK Finance predict that by 2026 cashless payments will be so popular that just 21% of all transactions will be made in cash. It all looks promising, yet as the industry edges closer towards the creation of a completely cashless society, it would be unwise for operators to jump on the bandwagon assuming they will now be free from all troubles and losses. The truth is, that no matter how popular these contactless payment methods have become, there is a dark side to going cashless that many fail to recognise.
Even cashless transactions are never 100% safe from losses
Although cashless systems remove risks associated with cash handling, revenue collected through cashless systems is still vulnerable to gaps in financial controls. Most operators would be shocked to see how easily abuse is missed unless they regularly monitor operational activities.
As hospitality auditors, we have witnessed countless sites go cashless. Sadly, some continue to be exposed to perpetrators who simply find new ways to cheat the system because their fraudulent behaviour funds their extra income. Manipulation of service charges and tronc, as well as the insertion of rogue card machines, are just some of the latest methods through which fraud is committed. The only real way to spot anything untoward like this happening, is by specifically monitoring till variances and to dig deeper whenever anomalies or unusual activities are identified.
Cashless transactions cannot account for losses caused by human error
Having collected quite some data during our observation audits, whereby we investigate and uncover underlying causes of serious stock losses for businesses, we have found that 42% of recorded losses were due to staff error rather than any malicious attempt to extract money.
Now that more transactions are completed via delayed payment instead of an immediate revenue transaction, human error is having an even bigger impact on stock results than before. Most frequently it can be linked back to food and drink being left off bills by accident. Since the recruitment crisis, this has been exasperated by the introduction of less experienced staff who are even more likely to miss extra products and drinks from a table bill.
The lesson to learn is that reliance on automation does not always deliver the best results because all too often it can hide any traces of human error. To ensure these errors are uncovered before losses are incurred, my advice would be to task senior managers with the checking of bills before they are handed out to tables. Frequently checking compliance of service standards would be an additional step that would help to promote best practices and determine any training needs.
Going cashless does not eliminate the use of cash in your business
While cash is still an option in society, any business that decides to go cashless will continue to be threatened with losses through the ‘convenience’ of paying in cash. One common trend we have come across is that some guests still want to pay with cash and will actively persuade staff to accept cash from them. With no means to enter it as revenue, it is simply pocketed by the staff.
Tightening up internal policies, keeping close track of stock and cash movements, as well as escalating excessive stock losses to hold managers to account, would all be beneficial in eliminating the use of cash for payments.
Portable card machines are a gateway to diverting moneys from your bank account
Card transactions may seem secure, but in our experience the direct access that managers are entrusted with, in combination with the frequent portable use of credit card machines can result in exploitation. During my time as a consultant, we have discovered tens of thousands of pounds worth of losses build up over the space of a year in some of the cases we investigated.
Although relatively uncommon, the general lack of security which allows managers to use card machines to credit refunds to their own account can easily go unnoticed. Machines left in cupboards can give opportunists plenty of time to exploit a secure cashless system in obscurity. To reduce these risks it is wise to implement strict credit card protocols. Card machines that are integrated with tills can help too, but even then staff are able to by-pass these processes. Adding levels of accountability and extra checks to monitor credit card statements regularly is certainly worth any operator’s time.
Operators looking to get through lockdown with minimal losses should visit www.venners.com for further information.