Small businesses are 100 times more likely to experience losses from fraud per
employee than their most prominent counterparts (Wells, 2003). Therefore, some small
businesses, such as restaurants, use customer checks with pre-numbered sequence codes to
reduce the risk. Basically, each server uses these checks to note the customer orders, and if a
mistake is made, they are to void that check and write a new one. Then at the end of the shift,
all canceled checks are to be turned in to the manager. While this process might reduce the
fraud risk and control a bit the cash receipts, it could be effective in a business with small
staffing and workload. Where the manager could oversee or monitor the staff closely. However,
suppose the restaurant gets packed and it has a large staff. Due to the rush, the server may
place an order in the kitchen and forget to void or correct it in time, resulting in a dish made by
the kitchen staff and then thrown it away or given for free to a friend or friend customer.
Based on this common scenario, this could be considered a noncash asset misappropriation,
resulting in losses to the restaurant. In addition, this process puts too much trust in the staff,
which is the third factor for significant fraud losses in small businesses involving the human
element (Wells, 2003). Therefore, this control might reduce the risk of fraud, but its
effectiveness in controlling cash receipts or asset misappropriation is questionable.
Implementing a Point of Sales (POS) system is a more effective way to control cash
receipts. According to Snyder (2022), it supports the business in payment collections. It also
provides other features that can help track your sales and inventory and prepares a POS report
that allows the management to make better decisions. In addition, the system will safekeeping
data related to the sales transaction, including the employee recording the transaction, the
item sold, and the type of payments; some systems even record the customer’s name.
Therefore, this system, with adequate training for the staff and management, provides a more
effective way to control cash receipts and helps the business operations. Some small
restaurants prefer the pre-numbered sequence code checks because the implementation cost
of a POS is a factor to consider since it could be a vast expense for the business. However, the
advantages of having a POS outweigh the implementation cost and provide better cash receipts
control and helpful information about the business operation and strategies.
References:
Wells, J. T. (2003, March 1). Protect Small Business. Journal of Accountancy.
https://www.journalofaccountancy.com/issues/2003/mar/protectsmallbusiness.html
Snyder, K. (2022, November 7). What is a Point of Sales Report? (2022 Guide). Forbes Advisor.
https://www.forbes.com/advisor/business/point-of-sale-report/
