Two of the most common causes of financial loss are theft and wastage. Reducing losses starts with audit and investigation, a review of operating procedures and existing loss prevention measures.
The decision to tackle losses must come from the board. Avoidable financial losses have a direct impact on the bottom line. A modest investment in loss auditing, combined with improved loss monitoring, can significantly improve profits.
Loss can result from many different causes including:
- theft of physical assets such as plant and equipment
- theft of stocks and materials, on site or in the delivery process
- theft of parts or finished products from the production area or warehouse
- theft by employees
- theft by criminals breaking and entering premises
Losses can also result from the theft of “intangibles”. This includes crimes such as:
- unauthorised financial transactions
- unauthorised sharing of financial or customer information
- unauthorised sharing of information about technological processes
- unauthorised sharing of product specifications
- unauthorised sharing of sales and marketing plans
It should be possible to eliminate losses resulting from wastage and inefficiency, but resistance to change often makes it hard to achieve. An external audit reduces the friction of internal conflict. It provides the board with information and options for loss reduction, before any decisions are made and implementation of new procedures commences. This allows time for consultation, to ease the introduction of more efficient operational processes.