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Cash Module Stamps Out Practice Fraud
July 3, 2007
The temptation of cash in the practice has led to an estimated one in three practices being defrauded – often by seemingly longstanding, loyal, staff believes Optisoft, provider of the UK's most widely used practice management software.

"Perhaps more than any other retail sector, optics is wide open to fraud as so many practices still use a traditional till, or even worse, a cash box and manual ledger," said Optisoft Managing Director, Keith Sheers.

But thanks to greater use of an in-practice Cash module the problems are quickly overcome. We spoke to one nationally known independent, who runs a large regional practice, about his first hand experiences of staff fraud. This led him to discover that the problem was far more widespread than many would like to admit.

"When I relay our own experiences to professional colleagues at various optical gatherings it is shocking how many admit to having suffered the same thing. I have spoken to numerous people who have been in practice for 20 years or more and more than a third of them have experienced this in at least one instance," he said.

Estimates suggest that the practice lost £35,000 over a seven year period, "but we could not go back further than seven years as records had been destroyed. It was impossible to add it up reliably – it may have been going on for much longer".

Before identifying the problem in 2001 – shortly after installing the Optisoft system - he believes the practice was losing at least £100 a week through a well rehearsed scenario.

"Once the system was in place, and with the help of some very attentive staff who realised something was amiss, the fraud was very quickly uncovered. In retrospect we realised that the person involved had been very reticent about the new computer system being installed."

"The patient arrived to collect their glasses and was asked how they would like to pay. If they opted for credit card or cheque they were taken over to the till. Cash payments were sometimes handled at the dispensing desk, removing the need to take the patient to the till, especially if the patient was infirm. In our case the cash was taken and recorded manually on the patient's card as 'pre-paid' with that day's date. The card was then filed away and the receptionist did not need to reconcile payment with that day's takings – under the old pre-Optisoft system. If the account was not reconciled back to the date of the first appointment when the glasses are collected no one was any the wiser, and wouldn't be for two years. The patient was given a hand-written, not till-printed receipt."

Another well-tested scam was also identified - "Small amounts of just two or three pounds were occasionally missing from the till and this proved to be a sign of something much greater. If no one is looking the employee may take the cash from the patient and open the till to get the small amount of change out. This small discrepancy at the end of the day can mask a high degree of fraud," he added.

"It certainly added insult to injury to realise that the practice was paying for both the stolen cash and the change!"

An old stock of blank receipts has also been known to cause problems for some practices, even after the introduction of a practice management system if the Cash module is not rigorously applied. Used in place of the till for cash payments they by-pass the need for reconciliation since the till cannot know that they were used.

Overcoming all of these tempting opportunities, Optisoft's Cash module, now running in nearly 500 practices throughout the country, does not allow the till to be opened without the user's password being logged in: there is a record of who opened the till and at what time.

Every transaction is efficiently logged in and out of the till, and is linked to the patient's database by the system, producing an unalterable transaction record.

"If you are suspicious of theft it is possible to perform a simple audit by logging one month's worth of jobs returned. After a couple of weeks review the status of the collections. Spectacles should either be awaiting collection or have been collected and transactions recorded. If there is a discrepancy look for the original record – it might be easy to return a record to file without reconciliation," explained the practitioner.

"We did this and in each case we telephoned the patient and we found they had a receipt. We asked them to bring this along, which we found to be one of our old stock handwritten versions, signed by the individual who we suspected," he added.

Once the case was clear the practice called in the Police but, as in so many other instances, the Crown Prosecution Service would only accept witness statements in the case against the suspected member of staff, saying that the 400 other incidents raised could not be proven beyond reasonable doubt.

"You need to be aware of patterns of unusual behaviour and lifestyle changes in your staff such as a costly divorce, disrespect for the practice and management and a general chip on the shoulder."

"Nowadays the Optisoft system raises an account at the point when someone orders a pair of spectacles and when they come to collect them the account is settled, and the account is zeroed. You know how many pairs have been ordered and this system cannot be defrauded.

"By tracking the incoming orders you can also get a very early and accurate profit and loss account and you know each month what the sales will be. A reduction in gross profit could be because you have spent more on buying goods or sold less or some goods that you have bought have been pilfered away. Changes in gross profit margin could indicate that someone is nibbling away.

"The silver lining of this was that this issue was incredibly good for team-building and pulled all the other staff together. The big advantage is that at the ordering desk the account is raised and this protects you as someone in authority can take an overview and get a printed report.

"The fact that everyone knows that all transactions are recorded against the individual operator ensures that no one is led astray."

Other practices have experienced a steady flow of cash – up to £40,000 over a three year period for one practice – being lost through voiding transactions through a standard manual till. Optisoft's Void Transaction Report highlights this situation immediately.

Protecting the practice from tax problems is another advantage of the Cash module - "It facilitates the agreed VAT regime and makes keeping tax returns much easier which has the added advantage of reducing accountancy bills," added Keith. "Relatively new in practice management systems, the Cash module has probably had the biggest and fastest take-up of any other," he added.

Promoting a professional image and improving service, with no more flicking through catalogues for pricing thanks to the bar code, everything is sold quickly, efficiently and at the right price.

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