by CDK Global | 3 May 2017

Crime Happens

When you think about crime, do you think, “It won’t happen to me?” An owner I know thought that same thing until he called to tell me that he’d just discovered someone had been stealing from him.

A powersports dealership is a ripe target for all kinds of crime: fraud, theft, forgery, and embezzlement among them. And any of them can happen to you.

Here’s a rundown of exactly what these crimes entail:

Theft: The unauthorized taking of property from another with the intent to permanently deprive them of it. The most important word here is intent. The person taking must have intent. A CFO once told me that taking a pen from the office is theft. He’s wrong. Most people do not intentionally steal pens.

Fraud: A false representation of a matter of fact that deceives and is intended to deceive another. This can be done with words, conduct, false or misleading allegations, or by concealing of something that should have been disclosed.

Forgery: The creation of a false written document, or alteration of a genuine one, with the intent to defraud. Years ago, an employee where I worked changed check stubs for her sister-in-law to help her continue to receive welfare benefits. A clear-cut case of forgery. She was caught only because the government agency called me to verify the sister-in-law’s employment. Lesson learned: keep check stubs locked up, just like you would checks.

Embezzlement: The unlawful conversion of property by someone who has been entrusted with it. The offender generally has some type of relationship with the victim, such as being an employee, a fiduciary, a bank or a government official. Embezzlement can involve small or large sums and can be as complex as running a Ponzi scheme. Unfortunately, embezzlement is much more common than anyone believes it to be in our industry. In my experience, it’s the number one crime plaguing dealerships.

An Ounce of Prevention…

You don’t have to be a victim. Taking preventive measures can protect you—and your bottom line:

1. No one person should handle money from beginning to end. The cashier should not be the one that reconciles their cash drawer. The cashier should not know how much money they brought in for the day. I remember my first job at Burger King. I was so excited to finally run the registers — until my first shift was over. The manager ran a register report (she did not show it to me) and then had me count my cash drawer and log it. Then she reconciled the monies; register tape report to actual cash. I was mortified! I felt she was questioning my integrity! I didn’t understand then, but I know now that process was as much for my protection as it was for the company.

2. Have a fixed starting point in the cash drawer, including the change. When the day is over, the cashier counts down to the starting amount, and the rest goes to the accounting department. Every once in a while, the accounting department should remove or add $10 or $20, just to make sure there is nothing questionable going on.

3. Managers should run reports to look for things out of the ordinary. Here’s a good example. I was at a dealership in North Carolina that was brand-new to using computers. While working with their CPA (who was skeptical about computers), we processed a report that showed that an invoice was cashiered out between 1:00 a.m. and 2:00 a.m. The CPA was adamant that the computer system was broken and the data was garbage. I found out who the cashier was, and it turned out to be the owner. The owner explained that a client had stopped by the dealership, saw she was still there and called asking to make a purchase before leaving town. Everything was on the level, but the report showing an anomaly allowed us to investigate and be sure.

4. Be aware. Report anything that is out of place or appears to break the rules. No one wants to be a “snitch.” On the other hand, not saying anything puts your job at risk, too. For example, many think clocking in for someone that has not yet arrived is no big deal. It is a big deal, though. Both the “clocker” and the late or absent person could lose their jobs for committing fraud. And anybody who sees it happening and doesn’t speak up is complicit.

Remember, crime can happen to anybody—even you! By taking the proper precautions, you’ll save yourself plenty of money—and headaches.