Maintaining and Improving the Revenue Control System Pertemuan 11 Matakuliah: V0254 - Operational Tata Hidang II Tahun: 2010

Maintaining and Improving the Revenue Control System

Pertemuan 11

Matakuliah : V0254 - Operational Tata Hidang IITahun : 2010

Revenue Security

• Errors in revenue collection can come from simple employee mistakes or, in some cases, outright theft by either guests or employees.

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Revenue Security• In its simplest form, revenue control and security is

a matter of matching products sold with funds received. Thus, an effective revenue security system ensures that the following formula reflects what really happens in your foodservice operation.

• The potential for guest, employee, or supplier theft or fraud exists in all of these areas.

Product Issues = Guest Charges = Sales Receipts = Sales Deposits =Accounts Payable


External Threats to Revenue Security

• A guest said to have walked, or skipped a check when he or she has consumed a product but has left the foodservice operation without paying the bill. (See Steps to Reduce Guest Walks or Skips)


External Threats to Revenue Security• Another form of guest theft is that of fraudulent payment.

This includes passing counterfeit money, bad checks, or most commonly, the use of invalid credit or debit cards.

• A credit card, is simply a system by which banks loan money to consumer as the consumer makes a purchase.

• Travel and entertainment cards are a payment system by which the card issuer collects full payment from the card users on a monthly basis.

• A debit card is a form of guest payment in which the funds needed to cover the user’s purchase are automatically transferred from the user’s bank account to the entity issuing the debit card.


External Threats to Revenue Security• If restaurant managers are to ensure that they

collect all of the money that are due from payment card companies, they must effectively manage the interface (electronic connection) between the various payment card issuers and their restaurant.

• The merchant service provider (MSP) plays an important role as the restaurant’s coordinator/manager of payment card acceptance and funds collection.


External Threats to Revenue Security• A restaurant accepting payment cards does not

actually receive immediate cash from its card sales, but rather it will be credited via electronic funds transfer (EFT) the money it is due after all fees have been paid.

• All businesses that accept cards – credit or debit - are charged fees for every transaction. Theses fees are called interchange rates, and are a percentage of the value of the transaction.


External Threats to Revenue Security• If you agree to accept checks, you will experience

some loss.• Another method of guest theft you must be aware

of is that used by the quick-change artist. A quick-change artist is a guest who, having practiced the routine many times, attempts to confuse the cashier. In his or her confusion, the cashier gives the guest too much change.


Internal Threats to Revenue Security

• Service personnel can use a variety of techniques to cheat an operation of small amounts of money at a time.

• Complete revenue control is a matter of developing the checks and balances necessary to ensure that the value of products sold and the amount of revenue received do indeed equal each other.


Internal Threats to Revenue Security • Servers can misrepresent the amount they charge

guests.• Food operations should require a written guest

check recording each sale. A guest check is simply a written record of what the guest purchases and how much the guest was charged for the item(s).

• Hard copy guest checks should be recorded by number and then safely stored or destroyed, as management policy dictates.


Internal Threats to Revenue Security• A method of service personnel fraud is one in

which the server gives the proper guest check to the guest, collects payment, and destroys the guest check but keeps the money.

• For this reason, many operators implement a precheck/postcheck system for guest checks.


Internal Threats to Revenue Security• A user workstation, that is, a terminal primarily

being used only to ring orders, may be utilized. The guest check will then be taken to a cashier terminal for settlement.

• There are a variety of components available to you as you seek to design a good guest check control system. These can include the use of management issued guest checks, multi-copy guest checks (carbonless paper), and guest checks generated by computerized POS systems.


Internal Threats to Revenue Security• Service personnel may charge the guest for a

higher priced item while serving a lower priced one, and then keep the difference in selling price.

• In some operations, even sales that were originally properly recorded can become a source of theft. This is so because these operations allow changes to be made to previous rounds. A previous round is a service round that occurred before the most recent service total.


Internal Threats to Revenue Security• Not all service personnel are dishonest, of course,

and sometimes honest mistakes can be made. This usually occurs when service personnel are required to total their guest checks by hand.

• It is important to remember, that even sophisticated computerized systems hold the potential for employee fraud.


Internal Threats to Revenue Security• If a cashier is responsible for the collection of

money, several areas of potential fraud can exists. The cashier may collect payment from a guest but proceed to destroy the guest check that recorded the sales. Another method of cashier theft involves failing to ring up the sale indicated by the guest check while pocketing the money.


Internal Threats to Revenue Security• In addition to theft of your own business financial

assets, the hospitality industry affords some employees the opportunity to defraud guests as well. Some techniques include:• Charging guests for items not purchased, then keeping

the overcharge.

• Charging the totals on credit card charges after the guest has left, or adding credit card charges and pocketing the cash difference.


Internal Threats to Revenue Security

• Misadding legitimate charges to create a higher than appropriate total, with the intent of keeping the overcharge.

• Purposely shortchanging guests when giving back change, with the intent of keeping the extra change.

• Charging higher than authorized prices for products or services, recording the proper price, then keeping the overcharge.


Internal Threats to Revenue Security• Cashiers rarely steal sums directly from the cash

drawer because such theft is easily detected. • Management can compare the sales recorded by

the cash register with the money actually contained in the cash register. If it contains less than sales recorded, it is said to be short, if it contains more than sales recorded, it is said to be over.

• Consistent cash shortages may be an indication of employee theft or carelessness.


Internal Threats to Revenue Security• If the cash register has a void key, a dishonest

cashier could enter a sales amount, collect for it, and then void, or erase, the sale after the guest has departed.

• Another method of cashier theft involves the manipulation of complimentary meals or meal coupons.

• It is important to remember that even good revenue control systems present the opportunity for theft if management is not vigilant of if two or more employees conspire to defraud the operation.


Internal Threats to Revenue Security• Bonding is simply a matter of purchasing an

insurance policy against the possibility that an employee will steal.

• If an employee has been bonded and an operation can determine that he or she was indeed involved in a theft of a specific amount of money, the operation will be reimbursed for the loss by the bonding company.


Developing the Revenue Security System

• An effective revenue security system will help you accomplish the following important tasks: – Verification of product issues– Verification of guest charges – Verification of sales receipts – Verification of sales deposits – Verification of accounts payable



• Verification of product issues• The key to verification of product issues in the

revenue security system is to follow one basic rule:

• No product should be issued from the kitchen or bar unless a permanent record of issue is made.

Documented Product Requests = Product Issues



• Verification of guest charges• When the production staff is required to distribute

products only in response to a documented request, it is critical that those documented request result in charges to the guest.

• Product issues must equal guest charges.• Each guest check must be accounted for, and

employees must know that they will be held responsible for each check they are issued.

Product Issues = Guest Charges



• Verification of sales receipts• Sales receipts refer to actual revenue received by the

cashier or other designated personnel, in payment for products served.

• Both cashier and a supervisor must verify sales receipts.

• Sales receipts refer to all forms of revenue, such as cash, checks (if accepted), or bank cards.

Guest Charges = Sales Receipts



• In general, there are four basic payment arrangements in use in the typical foodservice operation. They are as follows:– Guest pays cashier.– Guest pays service personnel, who pay cashier.– Guest pays service personnel, who have already paid

cashier.– Guest is directly billed.

• Accounts receivable is the term used to refer to guest charges that have been billed to the guest but not yet collected.



• Verification of sales deposits• The deposit slip may be completed by a cashier

or other clerical assistant, but management alone should bear the responsibility for monitoring the actual deposit of sales.

• Management must personally verify all bank deposits.

• This involves the actual verification of the contents of the deposit and the process of matching bank deposits with actual sales.



• Embezzlement is the term used to describe theft of a type where the money, although legally possessed by the embezzler, is diverted to the embezzler by his or her fraudulent action.

• Falsification of bank deposits is a common method of embezzlement. To prevent this activity, you should take the following steps to protect your deposits:– Make bank deposits daily if possible.– Ensure that the individual making the daily deposits is

bonded.



3. Establish written polices for completing bank reconciliations (comparison of monthly bank statements vs. daily deposits).

4. Review and approve bank statement reconciliations each month.

5. Employ an outside auditor to examine the accuracy of deposits on an annual basis.

• If verification of sales deposits is done correctly and no embezzlement is occurring, the following formula should hold true:Sales Receipts = Sales

Deposits



•Verification of accounts payable

• Accounts payable refers to the legitimate amount owed to a vendor for products or services rendered.

• The authorized purchaser must verify the legitimacy of accounts payable to be paid out of sales deposits.

• In a revenue system that is working properly, the following formula should be in effect:

Sales Deposits = Accounts Payable for Legitimate Expenses



• Supplier Fraud• The typical supplier scam involves goods or

services that you would routinely order. • These dishonest suppliers take advantage of

weaknesses in an organization's purchasing procedures or of unsuspecting employees who may not be aware of their fraudulent practices.

• Scams initiated by vendors can take several forms such as phony-invoice scams, unauthorized buyer scams, and the gift-horse scam.



• Phony-invoice schemers know that restaurants sometimes make mistakes or can be careless in accounting, so they prey on these weaknesses. The invoice may be a solicitation in disguise and in very fine print contain the following disclaimer: “This is a solicitation. You are under no obligation to pay unless you accept this offer.”



• With unauthorized buyer scams, the supplier secures the name of an employee before products are shipped and the restaurant is billed for unordered goods or services. The invoice, which includes an identified employee’s name as the “authorized” buyer, arrives several weeks (or more) later, for three reasons. – The inflated price, as much as 10 times what should be paid

to a legitimate supplier, is less obvious if the invoice arrives well after the merchandise has been received.

– The chances are good that the restaurant has used the merchandise before the invoice arrives.

– The supplier will claim that the time which it could have accepted returned goods has long passed.



• The gift-horse scam starts when a caller tricks an employee (or manager) into accepting a modest gift or a free promotional item, with a passing reference to merchandise or services. The restaurant then receives overpriced, unordered merchandise, followed weeks later by an invoice that includes the employee's name as the authorized buyer.



• When an alert foodservice manager protests that he or she did not authorize the purchase and delivery of the overpriced merchandise and thus should not have to pay for it, the supplier will respond in fairly predictable ways. These include:• Bullying: The seller argues that the products were ordered. • Negotiating: Here the seller expresses sympathy for the

“misunderstanding” that has occurred and offers to settle the bill at a reduced (but still inflated!) price if payment is made immediately.

• Charge for Returning: In this case, the seller offers to allow the restaurant to return the merchandise but only if they pay a significant restocking or shipping fee.



• You can protect your revenue from vendors who would attempt to defraud you. Here are steps you can take:– Know your rights– Assign designated buyers and utilize purchase orders at

all times– Check the documentation before paying bills– Train your staff


The Complete Revenue Security System

• The five key principles of a revenue security system are as follows:– No product shall be issued from the kitchen or bar

unless a permanent record of the issue is made.– Product issues must equal guest charges.– Both the cashier and a member of management must

verify sales receipts.– Management must personally verify all bank deposits– The authorized purchaser must verify the legitimacy of

accounts payable to be paid out of sales deposits.


The Complete Revenue Security System

• It is possible to develop and maintain a completely manual revenue control system.

• However, when properly selected and understood, technology enhanced systems can be a powerful ally in the cost control/revenue security system.


Technology Tools• Protecting sales revenue from external and internal

threats of theft requires diligence and attention to detail.

• Software and specialized hardware now on the market that can help in this area included those that:1. Maintain daily cash balances from all sources, including

those of multi-unit and international operations.2. Reconcile inventory reductions with product issues from

kitchen.


Technology Tools

3. Reconcile product issues from kitchen with guest check totals.

4. Reconcile guest check totals with revenue totals.5. Create over and short computations by server, shift, and

day.6. Balance daily bank deposits with daily sales revenue and

identify variances.7. Maintain database of returned checks.8. Maintain accounts receivable records.9. Maintain accounts payable records.

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Technology Tools

10.Interface back office accounting systems with data compiled by the operation's POS system.

11.Interface budgeting software with revenue generation software.

12.Create income statements, statements of cash flows, and balance sheets.



Documents

Maintaining and Improving the Revenue Control System Pertemuan 11 Matakuliah: V0254 - Operational Tata Hidang II Tahun: 2010