Preventing money loss - money on table wth chequebook and pen

Money loss, also known as shrinkage, is a very common problem, especially in retail, manufacturing, and food businesses.

It’s when products and essential resources that you should have are suddenly missing or unaccounted for. Some money loss is expected in most businesses, but if it gets out of hand, it can threaten your profitability. Here are some of the most common causes and how you can eliminate them.



When most retailers hear about money loss, their first thought will be theft. It can be a result of shoplifting or employee theft, but the answer is to invest in better security practices both in front of and behind the counter.

CCTV in your shop and stock rooms can help. Train employees to recognise and deal with potential theft from both customers and their co-workers. Use secured cash drawers to stop unauthorised access to the money. Security measures work not just to catch instances of loss by theft, but to prevent it via deterrence as well, so make sure any safety features are highly visible.



If you deal with vendors, then vendor fraud can be just as much of a risk, as well. Staff members on the vendor’s side may be skimming products or materials off the top, or billing schemes may involve you being charged more than you should be.

Avoiding vendor fraud is all about knowing the risks and double-checking both the bills and the inventory that comes from your suppliers. Even the most reliable and reputable vendors are at risk from the occasional fraudulent employee, so never neglect those essential checks.



Many products spoil when they’re not properly cared for. Some spoilage has to be accounted for, especially in foodstuffs. But that doesn’t mean you can’t do anything about it.

Ensure that you have the right kind of storage space with whatever temperature control and air quality equipment is essential. If you’re handling food products in bulk, such as flavouring or baking ingredients, invest in resealable poly bags that can be open, closed, and re-used without risking spoilage or high packaging costs.

Know the shelf-life of all your products and make sure you’re using those products closest to their sell-by date first.



Sometimes, you simply get the numbers wrong. You don’t have as many products or materials as you think you did because of an administrative error. Someone might have written down the wrong number or got the count wrong.

Automating your inventory system is the best way to eliminate human error. Computer-run inventory systems can automatically count products, as well as subtracting from them every time a product is sold and delivered. It’s not completely free of error and a bi-annual inventory check is recommended to reconcile your system and your real stock numbers, but it can severely reduce the risk of perceived loss.


If you let loss grow out of control, you will be making significantly less money that you should be. Ensure you’re taking care of your products, securing them, and accounting for them all. Aim to stamp out loss entirely, even if you might never have a 100% success rate.


Eliminating Money Loss in your Business

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: