Ensuring ongoing legislative, operational and financial compliance is critical to running a safe and profitable restaurant business. While it can be challenging to do this across a multi-site estate, third-party auditing has been proven to deliver valuable insight and stringent controls for the savvy operator.
1. Protection against fraud
With one major story in particular filling industry news column inches in recent times, you needn’t look far to see the effects large scale fraud has on a hospitality business. Operators typically have a corporate governance code in place and part of that code should lay out how the company has determined it shall prevent risks relating to financial malpractices and fraud. The auditors involved in the aforementioned case remarked that it was not their role to look for or detect fraud. Nevertheless, savvy operators should have measures in place to detect fraud, treating it as an imperative part of corporate governance.
A financial compliance audit can unearth a whole host of financial wrong doings. Our own auditors report finding everything from £40k stolen by a deputy manager to a systemic £2m fraud operation that had been running undetected for ten years!
2. Maximisation of yields and profits
Any business that retails food and beverages can find it tough to control shrinkage. Without the necessary controls, you’ll quickly find it starts eating into profits. Losses can occur due to mistakes, pouring errors, lack of training, unrecorded stock movements, poor security of stock, the giving away of free drinks. There are hundreds, if not thousands of ways of losing money which is why it is prudent to remedy with proper stock controls and ensuring that staff are complying with them. That could mean by auditing internally, which has its flaws. The better option is to outsource.
Stocktaking is a great way of tackling shrinkage within your venues, but equally as important is checking that controls are being adhered to. Relevant control checks include checking security, verifying internal counts, analysing invoices and delivery notes for discrepancies, as well as monitoring and checking stock movements. By putting proper stock control compliance checks in place, an operator can improve bottom line by between three and seven percent.
3. Prevent against losses and internal theft
One challenge operators face is finding a way of dealing with unaccountable losses. By that we mean losses that have occurred, possibly for many different reasons, but where the root cause is difficult to detect. However, it’s fair to say that most of the time the cause is human. The problem is that it is often hard to discern which human. Due to the nature of the majority of hospitality work, which combines low pay, casual work with an exposure to cash, tills and banking systems, financial losses are common.
Losses can occur by someone, a member of staff either exploiting discount vouchers, under ringing orders, or manipulating banking documentation. Our auditors have uncovered members of a restaurant’s staff stealing thousands of pounds to fund a gambling debt via banking fraud. They’ve seen cultural issues take hold within certain sites which have gone on to present annual losses of £40,000 from staff giving away free drinks to friends and family.
Being realistic, you have to accept that there are many areas in your business where your staff are directing money away from your bottom line. Our consultants have actually defined 16 areas of operation that are vulnerable to losses. Venners consultants can help you overcome many of these by covertly auditing the behaviour of your staff and periodically checking if they’re complying with your cash, banking and finance controls.
Aiding corporate governance and associated risks through periodic validations. Venners provide audit, consultancy, stock control and software services which help you build and maintain compliance levels across all areas of your operation, helping you run a safer, more profitable hospitality business.
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