Call time on employee fraud!

This article is brought to you by Retail Technology Review: Call time on employee fraud!.

When employees run into problems beating the clock, some turn to their fellow work colleagues for help. James Manning, Business Development Manager at Auto Time Solutions looks at how biometric verification systems can thwart them and reduce payroll costs at the same time.

Employee fraud is one of the most pervasive problems facing the retail sector today. Yet despite growing financial losses retailers are still turning a blind eye to the scale of the problem and are failing to introduce workplace management solutions to combat time theft.

There are many ways in which employee theft may take place in the workplace but fraudulent clocking in where employees receive payment for hours they dont work - is one area believed to be on the increase.

In recent years many retail organisations have taken significant steps to improve their time and attendance solutions but security risks still prevail among most workplace management systems and organisations need to be aware of the common fraudulent practices perpetrated by employees.

Magnetic key and swipe card entry systems are two of the most popular methods for clocking in but despite providing accurate payroll management different opportunities exist for fraud because they can both be replicated or swapped between members of staff.

Buddy punching, or employees inappropriately entering time and labour data for each other, is a problem that plagues many organisations but the financial ramifications are difficult to determine and are often undermined.  Although buddy punching is still a practice carried out by a minority the scam is difficult to prove and allows offending employees to go unpunished and repeat their offence, equating to thousands of pounds in unused labour costs. In many companies it is believed that time fraud accounts for up to five per cent of the total annual payroll!!

The retail industry is just one sector fraught with buddy punching and subsequently more and more companies have turned their attentions to biometric technology in a bid to fight this crime and reduce excess payroll payments.

Unlike badges, sign-ins or other ways of monitoring staff, a biometric hand scanner ensures no employee can punch in for one another, thus eliminating time fraud and reducing payroll costs. Because every persons biometric features are unique, a biometric time clock provides a quick, accurate and reliable way to record in and out punches for each employee. Hand scanner terminals automatically takes a three dimensional reading of the size and shape of the employees hand and verifies the users identity in less than one second. As such, it offers an infallible means of personal identification for clocking in purposes.

Contrary to popular belief this data collection device is also much cheaper than first thought and involves an investment similar to that required by traditional badge swipe solutions. Yet, the length of time required to recover the costs is significantly reduced because biometric devices eliminate deceptive practices.

A biometric reader also ensures payroll accuracy by simply requiring each employee to be present with no cards or other credentials required. Losses due to buddy punching are eliminated and by using other features such as scheduling restrictions, unauthorised early-in and late-out punches are also prevented. In addition, retailers that implement solutions on the employee side no longer need to invest in keys and cards or replace those that are lost or damaged. They can also protect access to restricted areas of the store or to sensitive data stored in the back office.

There is no doubt that time and attendance fraud from staff is one area that has traditionally been paid little more than lip service. However in large stores the turnover of staff is so large that retailers need secure solutions to protect against fraud.

Retailers now simply must invest in systems and solutions that will combat fraud and by doing so will improve the bottom line in the long run. Buddy punching is difficult to prove and only through the introduction of biometrics will you know you are receiving an honest days work and that the employee is receiving an honest days pay.