The Hidden Threat Destroying Your Business: Employee Pilferage and How to Stop It

If you run a business, there’s one problem that might be happening right under your nose, and you probably won’t notice it until it’s already hurting your profits. It’s called pilferage.

That’s the polite term for small, unnoticed stealing. It doesn’t sound dramatic, but it’s still theft. And over time, those small losses pile up until they eat away at your bottom line.

This happens more often than most owners realize, especially if your business handles physical goods or materials. It’s even trickier to catch when you buy in bulk or use supplies that are hard to measure precisely.

Real-world examples of how it happens

Let’s walk through a few examples so you can picture what I mean.

Bakery or Food Service

Staff takes home sugar, flour, or butter “just a bit” at a time
Cleaning rags go missing and turn up as motorcycle wipes at home
Small portions of ingredients get used for personal baking projects

Convenience Store or Retail Shop

Drinks get opened and not paid for
Sardines, seasonings, or snacks end up in someone’s bag
“Small bites” through the day that never get logged as shrinkage

Thrift Store or Clothing Retail

Items are worn out under regular clothing and walk out the door
Accessories vanish quietly
“Damaged” items get taken home

Hardware or Construction Supplies

Screws, nails, washers, tapes… easy to pocket, hard to track
Tools get “borrowed” and never return
Small items vanish from stock without explanation

Printing Service

Staff prints personal stickers or labels for free
Bond paper and ink supplies disappear little by little
Machines get used after hours for side projects

Repair Shop or Service Business

Tools and materials are used for outside jobs
The worker earns, but you cover the cost
Replacement parts meant for customers end up fixing someone’s personal vehicle

Why this problem slips under your radar

The hardest part about pilferage is that you often won’t notice it until it’s been happening for a while. Here’s why:

You’re too busy to spot it
You’ve got a dozen things to handle daily. If a whole sack of flour goes missing, you’d notice. But a cup of flour here, a few screws there? Not a chance.
You don’t have a system
No logs, no routine checks, no structure. Many small businesses run on pure trust, and while that’s admirable, it’s not enough.
You trust too much
Trust is essential, but blind trust can be dangerous. Even honest people can make poor choices when no one’s looking and no system holds them accountable.

Warning signs that pilferage might be happening

Take a minute to think if you’ve seen any of these:

You keep buying supplies but profits don’t reflect your sales volume
One person handles both inventory and cash
You have no written records or logs
Inventory feels short, but you can’t pinpoint why
Employees get defensive about bag checks or supervision
Certain items run out faster than sales would explain

If even one of these sounds familiar, it’s worth paying attention.

How to protect your business

You can’t promise zero pilferage, but you can make it a lot harder to happen.

1. Start with simple systems

You don’t need expensive software to begin. Even a basic logbook works.
Record what goes in and what goes out. For example:

Restaurant: note when you open a new container of oil or bag of rice
Retail store: write down when you receive deliveries and unpack goods
Service business: list materials issued per job

When employees know you’re tracking, they’ll think twice. This isn’t about not trusting them. It’s about removing temptation and setting clear accountability.

If you can, upgrade to a spreadsheet or simple app later. Small improvements like that go a long way.

2. Install security measures

CCTV cameras are an investment worth every peso. They don’t just record; they discourage bad behavior.

Small business: two to four cameras for high-risk areas like storage and cash registers
Medium: cover all inventory zones and entrances
Large: use a full system with remote monitoring

Just seeing those cameras is often enough to stop pilferage before it starts.

3. Do random inspections

Create a policy for occasional bag or area checks before employees leave. Keep it consistent and respectful.

Say it clearly during hiring so it’s not a surprise later.
Example policy line:

“To ensure fairness and security for everyone, the company conducts random bag and vehicle inspections. This applies to all staff, including management, and helps protect both company property and employees from false accusations.”

4. Set clear written policies

Have an employee handbook that spells out what counts as theft, what happens if caught, and what the process is.

Sample structure:

First offense: written warning or short suspension
Second offense: termination
Severe cases: legal action

Hold short meetings to review policies from time to time. I used this system back when I ran my cake business, and it worked. Everyone knew the rules, so there were no excuses.

Also, yes, “dishonesty is grounds for termination” is valid under labor laws, as long as it’s clearly written, the offense is proven, and due process is followed.

5. Separate duties

Never give one person full control over both cash and inventory. That’s asking for trouble.

Minimum setup: One handles purchasing, another handles receiving
Better setup: Divide inventory, purchasing, and cash roles
Best setup: Have periodic audits done by someone not part of daily operations

If your team is tiny, do your own mini-audits monthly. Don’t rely on memory.

6. Build a culture of accountability

Talk about this early and often. When you hire, be upfront about systems and why they exist. The goal is not paranoia but professionalism.

Reward honesty. You can offer:

Small incentives for staff who report issues
Employee purchase programs so they can buy items properly instead of taking them
Profit-sharing or performance bonuses for long-term trust

When people feel trusted yet monitored fairly, they behave responsibly.

The real cost of ignoring pilferage

Let’s do a little math. Suppose you own a small printing shop, and one employee prints personal stuff worth ₱100 a day.

That’s ₱500 a week, ₱2,000 a month, and ₱24,000 a year.
Now imagine three people doing that. You’ve lost ₱72,000 a year — gone.

For a small business, that amount could’ve been your profit, your 13th-month fund, or even a new piece of equipment.

Take action before it’s too late

Slow sales are painful. At least you can see them coming and adjust.
But internal leaks? They’re quiet. You only notice when the damage is already done.

Here’s a simple starting plan:

This week: start a small inventory log for your top three most-used materials.
This month: write down your policies about inventory and employee purchases.
This quarter: save up for a basic camera or monitoring setup.

These aren’t about distrust. They’re about protecting what you’ve worked hard to build.

The truth is, no one plans to go bankrupt because of missing supplies, but many have. Don’t wait until you’re one of them.

Protect your business now while you still can.

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