Choosing an insurance policy is tough. While it might be tempting to buy less coverage, you know that you need to be adequately prepared for all of life’s unforeseen events. Paying more each month could save you in the long run.
Finding the right audit frequency is a similar decision. You want to audit enough to identify shrink quickly, but still avoid needless audit costs. It can be tricky, but there are ways to find the perfect balance.
Watch For Triggers
There are numerous events that prompt audits. Common triggers include bad audit results, changes in store personnel, sales trends and cash audit results. Some large chains even use a conceptual model of statistically weighted factors to help predict shrink. Examine all triggers that make sense for your business.
The Analytical Approach
Go by the numbers. For example, you can take a look at a store’s shrink to select the appropriate audit frequency:
o 0-1 percent shrink – audit every 90 days
o 1-2 percent shrink – audit every 60 days
o Over 2 percent shrink – audit every 30 days
When you enact a new audit program, test it. Analyze all the data from before, during, and after implementation. Determine if the new frequency was cost-effective and worth keeping, or if it’s back to the drawing board.
Empower Your Team
If you look at the data and still aren’t ready to proceed, let your skilled supervisors make the call. They can evaluate risk factors, and should be utilized as a resource to help decide which stores need more frequent audits and which ones need less.
There is no perfect answer for every business. Determining if a store needs an increase or reduction in audit frequency requires a proactive approach that considers all factors. After all, it’s important to do your research before buying insurance.