Where small businesses leak money

When a shopkeeper sees a shortage, the first thought is "someone stole it". In a small business, though, money rarely drains through one big hole. It trickles out through dozens of small cracks, each too small to notice, which together add up to a real sum by the end of the month. Below we go through these cracks one by one and show how to find each. The figures are examples; replace them with your own.

The receiving desk: written down but never delivered

The easiest loss to stop happens where goods are received. The delivery note says 20 cases of drinks, 19 came off the truck, but the driver was in a hurry and the paper got signed. If a case costs 54,000 so'm, one such incident a week is about 2.8 million so'm a year. The rule is simple: count before you sign, and if something is short, write it on the note on the spot and tell the supplier.

Counting cases alone is not enough, though: spot-check what is inside one or two of them. A case labelled "12 units" may hold 11. At every delivery look at three things: quantity, packaging condition (broken or wet) and expiry date.

Price, discounts and rounding

• The supplier raised a price by 1,200 so'm, but the shelf still shows the old one. At 90 units a month, that is 108,000 so'm lost.
• A weighed item (cheese, dried fruit) is recorded in pieces, so its balance drifts every time.
• A similar product is rung up at the till: a different colour or size, but cheaper.
• The shelf label differs from the till price, and the customer always insists on the lower one.

Checking ten shelf labels each week against the till price and the latest purchase price closes most of these cracks.

"Keep the remaining 500 so'm" feels pleasant to a regular customer but leaves no trace in your records. Rounding off 500 so'm on 40 receipts a day is 20,000 so'm a day and 600,000 a month. If it is a deliberate choice, fine, but write it down. Set a limit on the discount a salesperson may give, say 5 percent, and ask for the owner's approval beyond it. Record a discount as a separate line at the till rather than quietly lowering the price.

Expired and damaged goods

Spoiled, broken or expired goods go in the bin, but if they are not written off, the table still says they are "there". At the next count a shortage appears with no known cause. Fifteen cartons of milk a month at 11,000 so'm come to 165,000 so'm, which is not small either. Selling near-expiry goods at a discount in time costs less than binning them: even at cost, most of the money comes back. And before throwing anything away, note what, how many, why and who witnessed it.

Unrecorded outflow and theft

Goods taken home, a gift to a customer, a pack opened "to try", a debt to a friend: all of these leave the stockroom but never reach the table. For instance, 50,000 so'm a week of goods for home use is 200,000 so'm a month. Open a separate outflow reason for each, and you will see the sum, which makes silence harder.

Theft does happen, but it sits at the bottom of the list. Close all the cracks above first, and whatever difference remains is truly suspicious. Accusing an employee without evidence poisons the working atmosphere and distracts from the real cause, so check the paperwork first.

The leak log

Once a month keep one page: date, item, quantity, value and cause type (receiving, price, discount, expiry, unrecorded outflow, unknown). Fill the log right after a count or weekly check, while the details are fresh. At month end add up by type. The "unknown" line should shrink every month, a sign that your records are coming into order. Start fixing with the biggest type.

Conclusion

The cause of leaking money is usually not ill will but gaps in the records. Find and close them once, and the rest becomes habit. If you cannot pin down the cause yourself, the AniqHisob team can run a stock count, help put your records in order and trace the sources of loss.