Beware Of Giving One Employee Too Much Responsibility

Problem

I have a repair business client who had a customer service person for several years. He seemed like a good guy. Was very good with customers and knew lots about the computer system and the way things ran in the office.

This was all good and well, except for a few things. I noticed the cash in Quickbooks NEVER balanced to the cash drawer. Oftentimes there was a miscellaneous entry on the day’s closing to balance the general journal entry for the day to the cash drawer. I asked several times about this, and the answer was, “we don’t count the change so it’s always off”. They felt it was a waste of time to worry about the change being counted.

Then, there were the inventory problems. There had never really been a true inventory count, and when the bookkeeper at the time told the customer service person she wanted to count the inventory for year end, he said he’d do it himself. Unfortunately, he was needed if she was going to count since she didn’t understand what the parts were. It was like pulling teeth to ever get him to really do anything on the inventory, and we made an estimated guess at the end of that year.

The most recent issue involved checks written out to himself. I noticed that he was writing several hundred dollars worth of checks to himself as an “advance” on his paycheck at least every 2 weeks. I asked the bookkeeper about this and she said he writes the check first (he had signatory authority) and then tells the owner he took a loan. Even though the bookkeeper was keeping careful track of what he owed, this really bothered both her and I. I had mentioned something in the past to the business owner regarding loans to employees (they were in no financial position to be a bank)…but this had finally gone too far.

By the time I wrote the email to the owner about my concerns with the customer service person, she said he had already left the position. They never were repaid about $1,000 worth of loans he took for himself. But, in my mind, that’s not all he took. What about all the times the cash drawer was off because they didn’t count the change? Why was he reluctant to do inventory? There was a lot of time wasted when he didn’t show up to work and no one was really sure how to fill his spot because they weren’t trained to do the job.

Over the course of several years, I believe this company lost thousands of dollars because of this employee who was in a key position. He dealt with customers on a consistent basis, was responsible for the cash drawer, was responsible for all entries into the Point of Sale system which talked to Quickbooks, and had check signing authority.

Lessons Learned

• Don’t place too much responsibility on just one employee. Someone other than the person in charge of the cash drawer should be balancing it at the end of the day.

• Put better systems in place, and cross train employees to be able to fill in when one employee is not there.
• Trust your gut instinct when something feels wrong. This employee had many excuses for why he couldn’t be in to work. The owner ended up feeling bad for his family and health situation, and let him hang onto his job way too long. This cost the business thousands of dollars in wasted time, stress, and money!

Thanks to:

Anonymous

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