Stop counting cash. Start counting consumables. A complete manual for detecting fraud in service businesses.
If you audit a laundry business by only looking at the Cash Register, you are seeing only 50% of the picture. The real story is hidden in the trash cans, the hanger racks, and the electricity meter.
This is the easiest way to catch theft because hangers and polybags (shoppers) are physical items. Staff often forget that these items leave a trail.
To deliver a washed item, the staff MUST use packing material. Therefore:
Hangers Consumed = Garments Delivered
Staff often steal expensive solvents (Perc, Softeners) or use them for personal washing. Since liquids are hard to count, we use the "Variance Tolerance" method.
| Service Type | Standard Usage | Allowed Variance |
|---|---|---|
| Dry Cleaning (Suit) | 50ml Solvent | +/- 5% |
| Washing (10kg Load) | 200g Detergent | +/- 10% |
How to audit: Weigh your detergent drums every Monday. If the consumption is 20kg, but the orders booked only justify 12kg of usage, you have a massive leak. Either staff is wasting material, or they are doing "Ghost Washing."
This is my favorite method because it uses Physics. I have written a detailed case study on this here, but here is the summary:
Total Units / Total Orders.If your ratio spikes from 1.5 kWh/Order to 3.0 kWh/Order, it means machines are running, electricity is burning, but no orders are being entered in the computer.
Every garment that enters the shop MUST be tagged immediately. The most common theft trick is "Delayed Tagging."
The Trick: Staff takes clothes from a customer, washes them, takes cash, and returns them without ever putting a tag.
The Solution: "The Mystery Shopper"
Send a friend to drop off clothes. If they receive a handwritten slip instead of a computer-printed tag, fire the manager immediately. A handwritten slip is the biggest proof of theft.
Use this checklist every Monday morning to keep your business 100% leak-proof.