Byline: Brad Barth

NEW YORK — Neiman Marcus Stores has reduced the time it takes to perform daily sales audits from three hours to 30 minutes by implementing an “exception-based” reporting solution.
The application allows the retailer’s auditors to analyze a store’s daily point-of-sale transactions and identify instances where an incorrect price was charged or an incorrect refund was issued. Left undetected, such errors can propagate through transactional systems at the corporate office.
“The solution can flag those transactions so that they don’t update other systems erroneously,” said Holly Sellgren, manager of applications development for financial systems at Neiman Marcus. Accurate transactional information is important to Neiman Marcus’s general ledger accounting process, but it is also integral to its in-house credit, inventory and refund systems, among other applications.
While many retailers perform audits at one centralized office, Neiman Marcus hires an auditing staff at each of its store locations. Based in Dallas, the retailer completed its rollout of the solution in late September 1999.
Sellgren explained how the auditing process works in each store. “We pull the point-of-sale transactions every night and load them into the application. The next morning, the auditors look at all the receipts, do the corrections [on the flagged transactions] and also check to see if the cash is balanced for the store day.”
The solution catches many types of mistakes committed at the point of sale. While the auditors still need to fix the erroneous transactions, the process of finding them has been automated and expedited. “That’s part of the reason why auditors have cut down on their workload,” said Sellgren.
For instance, sometimes a store’s point-of-sale system accidentally drops a line from a transaction, resulting in an erroneous calculation. Or it may accept an invalid credit card number. The solution will identify both problems, allowing auditors to correct the math or void the transaction.
According to Sellgren, another great benefit of the solution is the ability to do additional validations on sales associates’ personal identification numbers and Universal Product Codes — something that was not possible with the retailer’s old legacy system, which was 20 years old.
By validating each product’s UPC at the point of sale, the retailer can accurately track its inventory flow, measuring its current in-stock levels by determining how many of each product was sold each day.
Personal identification numbers, meanwhile, are validated to monitor employee activity. Because sales associates enter their ID numbers into the register before they begin their shifts, Neiman Marcus can determine who is responsible for any questionable transaction.
Although the store cannot recover profits lost to an employee’s mistake, the retailer can use this information to determine whether a sales associate requires more training with the POS system or is simply dishonest. The solution also validates identification numbers to ensure that the correct employee is receiving the commission on a sale.
Virtually no type of transaction or currency exchange goes unnoticed by the solution, which is a product of STS Systems, Pointe-Claire, Quebec, as it helps auditors balance out their store’s finances. The solution accounts for store gift cards, petty cash withdrawals, product returns and even sales tax. “For the first time, we have a clear picture of sales tax that has been collected from the point of sale, and that has made tax reporting and reconciliation much easier,” said Sellgren.
Because of the solution, Neiman Marcus is better able to perform its general ledger accounting procedures. After a store’s transactional information has been reconciled, the solution uses this data to draft standardized reports that are passed along to the retailer’s accountants. “It has streamlined our general ledger accounting practices immensely, and it has automated a number of general ledger entries that were once made manually,” said Sellgren.
Neiman Marcus also uses the solution in its Dallas headquarters to draft reports on company-wide sales trends.
For example, the retailer is studying the ebb and flow of sales traffic throughout the day in each store. This helps Neiman’s manage its workforce. “If the traffic patterns are higher in the midafternoon, then we’ll staff accordingly. We’ll save by scheduling the right people at the right time to handle the flow of business coming in,” said Sellgren.
The solution also determines the percentage of each payment medium (cash, check or credit card) used to make a purchase. Sellgren said that the company breaks this information down even further, analyzing the percentage of each credit card brand used in order to determine which cards should continue to be accepted and which should not.

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