m10 nra5272 10_se_c10_final

ControllingFoodservice Costs

Protecting RevenueChapter 10

Learning ObjectivesAfter completing this chapter, you should be able to:

• Identify and explain the three parts of a revenue collection system.

• List the external and internal threats to revenue security.• Explain the basic control standards to safeguard cash and credit card information.

• Describe the four steps in the revenue security system.

• Explain several ways to discourage theft by employees.

Learning Objectives continued:After completing this chapter, you should be able to:

• List two important areas affected by accounts payable.

• Describe the steps in verifying the receipt of goods and services.

Chapter 10 Protecting Revenue

THE IMPORTANCE OF REVENUE CONTROLThree Parts of a Revenue Collection System

Charging the Guest

Collecting Revenue

Protecting Cash Assets


EXTERNAL THREATS TO REVENUE SECURITYCredit Cards

Personal Checks


INTERNAL THREATS TO REVENUE SECURITY


ENHANCING REVENUE SECURITYSafeguarding On-Premise Cash

Safeguarding Cash Deposits

Safeguarding Customer PaymentCard Information


THE FOUR-STEP REVENUE SECURITY SYSTEMI. Verifying Product SalesKitchen Issues

Guest Checks


II. Verifying Guest ChargesServer Reports

Shift Reports


Manager’s MathAnswer the Questions:

Server 20, $0.78

server 25, $0.00

server 28, −$20.42

server 30, $21.87


III. Verifying PaymentCash Control

Credit and Debit Card Payments

Coupons and Other Payment Forms


IV. Verifying DepositsCash

Payment with Credit Cards and Debit Cards


CASH AUDITSCashier and Server Banks

Petty Cash


MANAGING ACCOUNTS PAYABLE


VERIFYING RECEIPT OF GOODS AND SERVICESVerifying Amount Due

Invoice Payment

Chapter 10 Protecting Revenue - Summary

1. Identify and explain the three parts of a revenue collection system.

• Bringing customers to purchase food and beverages is of paramount significance to the success of an establishment.

• However, having a solid revenue collection system is of equal importance.

• This system begins with charging the guest and completing the sales transaction.

• Next, revenue must actually be collected, and finally, collected cash assets need to be protected.


2. List the external and internal threats to revenue security.• External threats include guests that walk or skip without paying for

their purchases, counterfeit currency, credit card fraud, and bad (NSF) personal checks.

• Internal threats include dishonest employees, including collusion between employees.


3. Explain the basic control standards to safeguard cash and credit card information.

• The number one rule in controlling cash is to make sure anyone who receives cash is not also able to take a register reading.

• A manager should be the only person able to void register overrings or mistakes.

• All transactions should generate a receipt that should be presented to the customer.

• The bookkeeper or accountant should never handle cash.

• If the same person has access to the records and cash, then it makes it very easy for a dishonest person to steal and cover up the theft in the books.

• Safeguarding credit card information requires being in compliance with the PCI (Payment Card Industry) data security standard, which sets standards pertaining to network security and the storage and handling of customer credit card data.


4. Describe the four steps in the revenue security system.

• A revenue security system tracks the amount of revenue that moves within a restaurant or foodservice operation.

• Revenue security starts with verifying product sales, moves on to verifying the amounts the guests were actually charged, then verifying that payment was actually made, and ends with verification of bank deposits.

• This is a sequential system where the manager matches the amount from the previous step and detects any possible discrepancies or errors.


5. Explain several ways to discourage theft by employees.

• Follow best practices when it comes to hiring employees.

• Conduct a thorough background check and interview all job applicants.

• Test applicants for job skills.

• Create a positive work environment to help reduce fraud and theft.

• Implement internal controls to increase the actual, and the perceived, chance of an employee getting caught if they attempt to steal.


6. List two important areas affected by accounts payable.

• How the manager handles the accounts payable affects two important areas: cash flow and supplier relationships.

• Timely payment to suppliers helps maintain good supplier relationships.

• In addition, paying invoices on time allows a restaurant or foodservice operation to benefit from supplier discounts and incentives that reduce food cost and increase operating cash flow.


7. Describe the steps in verifying the receipt of goods and services.• In this verification process, a purchasing agent first matches the

purchase order with the purchase invoice to ensure that the invoiced amount is correct.

• If the amount is correct and the products have arrived, the agent approves the invoice by signing off on it.

• If there are any variances in the invoice, the purchasing agent should request a credit memo to account for these adjustments.

• Once the invoice is approved, it is posted on the accounting system for payment processing.


Key Terms:Accounts payable The amount of money that an operation owes suppliers from which it has purchased goods, products, or services.

Auditing A financial examination of an organization’s accounts.

Card verification value (CVV) The three-digit code on the back of most credit cards.

Collusion The working together of two or more employees for dishonest purposes.

Counterfeit currency Money that is produced to resemble official legal currency closely enough that it may be confused for genuine currency.Extension The price of an item multiplied by the number of items being purchased.

Fraud An intentional deception to cause a person to give up property or some lawful right.


Key Terms continued:

Guest relations discount A discount on a meal offered by a manager because the guest was not satisfied with the quality of the food or service.

Merchant account A designated account where funds from guest credit card payments can be sent.

Merchant services provider A company that facilitates the transaction between an operation and the card issuer, also known as clearing.Open tab A temporary guest charge account that allows guests to purchase and consume products before paying for them.

Overcharging The act of charging more than the amount that should have been charged and collected.

Payment Card Industry (PCI) A data security standard. A series of technology requirements for retailers and companies that process credit cards, which are designed to ensure the protection of cardholder data.


Key Terms continued:

Service charge A labor-related fee, added by the manager, to be paid by guests.

Petty cash A small fund established to handle minor cash disbursements.

Undercharging The act of charging less than the amount that should have been charged and collected.


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