Duties & Responsibilities
Many small businesses consider it unnecessary to maintain detailed stock records - their system often being gauged by stock held or balance of funds at the bank. Many Insurers accept this situation, but just as nobody pays for goods without tangible proof of receipt, Insurers are unable to issue payment on claims that cannot be substantiated by supporting documentation. The trauma of armed robbery, for instance, is unpleasant enough, but when insufficient records are kept the situation is further compounded.
Inadequate records and inability to demonstrate a loss may lead to a compromise settlement. In such cases, there are no hard and fast rules. Each claim is treated on its own merits, and factors such as personal injury, previous losses and trading history will all colour an Insurer's attitude to a claim. This can reflect the degree of compromise in the settlement offered. If insured, your 'Consequential Loss of Profits policy' will only provide cover for a 'reasonable' period required for reinstating the business to its former level. It is likely that delays caused by inadequate records will not be allowed within a commercial environment.
Most companies maintain purchase and sales ledgers and undertake annual stock checks. If these are the only available records, then with a great amount of work, it may be possible to reconcile the purchases and sales right back to the last stock check and estimate the amount that has been stolen. This rarely leads to an exact settlement, and the delays caused can be lengthy. It is our experience that losses incurred in a compromise settlement generally outweigh cost-savings achieved through inadequate record keeping.
Additionally, there are other benefits in maintaining a comprehensive record system.
- All stock movements are automatically recorded.
- In built ability to trace from supply through manufacturing and to sale.
- Historical and current stock valuations.
- Re-costing ability for fluctuating gold prices.
- Simple stocktaking.
- Management reporting and analysis of sales and costs.
There are a number of computerised stock recording systems suitable for various aspects of the jewellery trade. Many policyholders appear to believe that their business is unlikely to suffer armed robbery.
Such an attitude is fool hardy and short-sighted.
Think ahead and make the investment in comprehensive up-to-date, stock-keeping records.
In the event of a claim, the company that is in a position to demonstrate concisely the loss it has suffered, should receive favourable treatment from its Insurers by swift settlement.
Approbation Goods and "memo"
There are several accepted forms of wording to be used on Approbation Notes that should accompany goods entrusted to an outsider. It is always advisable to use one of them. Here is an example:
"These goods are delivered on the express condition that they remain the property of the ABC Jewellery Co. Ltd. until paid for or invoiced; you in the meantime being responsible for loss or damage, however caused, to ensure their safekeeping".
It is essential to state clearly the quantities and/or weights of the entrusted goods. It is not sufficient to accept traditional informality and trust as a precedent for lax trading terms. These days it is imperative to demonstrate where responsibility lies. Normally each party, if adequately covered, will be insured to protect their own rights and interests.
Wordings used in this section are for guidance only. The laws regarding ownership and title are complex and you are advised always too take expert legal advice.
If you are a retailer be extremely cautious when entrusting goods to a customer that is not in the jewellery trade or unfamiliar with Approbation terms or "memo". The terms of an Approbation or Memo Note make the third party responsible for loss. Make sure that your customer is aware of his or her responsibilities. Do not assume that the goods are insured under the entrustments to others part of your policy. In all such cases refer the matter to your Insurers.
Ideally, each 'Outwork' or 'Delivery Note' should state that goods entrusted are the outworker's responsibility, and that any loss, damage or shortage is to be borne by them. It is advisable to incorporate a wording such as "These goods are passed to you, but shall remain our property at all times. They are passed to you on the express understanding that they are your responsibility at all times for any loss or damage, however caused, to insure and to take all reasonable steps to ensure their safekeeping".
Where documentation of such procedures is less formal, it may well be easier to establish terms of trading with regular your outworkers by dispatching a letter to them. This will casually establish a form of contract between you, and you will be able to state the responsibility of each party therein.
Continual false alarms can eventually result in police response being withdrawn. Good communications however, can reduce the likelihood of having your service withdrawn.
Immediately a false alarm occurs it is imperative to:
- Identify and rectify the problem.
- Renew any faulty parts, if it persists.
- If the problem is a line fault, report it in writing and ensure that you obtain an acknowledgement.
- Keep copy correspondence to show your policing authority as evidence of your attention to the problem.
- If you receive a letter from the police warning of a service being withdrawn, advise us immediately.
- After consulting with us, monitor the alarm condition yourself by instructing your alarm Central Control to call you or appointed key holders to attend your premises. Never do this alone - it may be a genuine alarm condition or a ruse to get you to the premises. There are many helpful security aids such as mobile phones, panic alarms etc. to assist you in these circumstances. Of course if the alarm is a genuine one call the police directly.
- If ever your service is suspended it is vital that you adopt the above procedures. Most police forces will respond to a citizen's report of a crime, even if the response to particular premises has been suspended. Police forces also usually respond when a panic alarm is activated - even when the service has been withdrawn.
Whatever you do, take steps to avoid suspension - respond to police notice and let them know that you are attending to the problem and always keep your insurers advised.
Your business is at risk and your policy cover may be seriously reduced if your alarm is not operating fully.
Your Insurers have agreed to underwrite certain risks of your business on the basis of the information supplied to them.
This includes its security protections and safeguards that have advised to your Insurers and form the basis of the acceptance. Therefore, the protections and safeguards must not be withdrawn or varied in such a way that it could be interpreted as being to the detriment of your insurers. If at any time your protections are reduced (as a result of faulty equipment, or withdrawal of police response etc.) then your Insurers must be advised immediately.
Whenever such a problem occurs, or if you are in doubt, call us and we will advise you accordingly.