AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Shrinkage is the gap between the stock your records say you should have and what is actually on the shelf. It comes from four places: theft by customers or staff, damage and expiry, supplier short-deliveries, and recording errors such as unrecorded sales or wrong item codes. Measure it as a share of sales at every stock count, find which cause dominates, and apply the control that fits that cause.
Measure it first
Shrinkage rate = value of missing stock at cost ÷ sales for the period. The missing value comes from your stock count variances after recounts.
Example only. A shop sells ₦5,200,000 in a month and the count shows ₦104,000 of stock missing at cost. Shrinkage is ₦104,000 ÷ ₦5,200,000 = 2.0%. If the shop's gross margin is 20%, it needs ₦104,000 ÷ 0.20 = ₦520,000 of extra sales just to earn back what went missing. That is why a small percentage matters.
Track the rate every month. A steady figure tells you the size of the problem; a sudden jump tells you something changed, such as a new staff member, supplier or till routine.
The four causes and their controls
1. Theft
Customers pocket small, high-value items; staff take goods or cash; a cashier rings up less than the customer pays; a delivery rider or driver keeps part of a load.
- One cashier per till drawer per shift, with a cash-up against the till report at the end of each shift.
- Voids, refunds and discounts need a supervisor's approval and are reviewed weekly.
- High-value, small items behind the counter or in a locked display.
- CCTV covering tills, the store room door and the delivery point, with recordings kept for a set period.
- Staff purchases rung through the till and paid for like any other sale.
- Two people present when the store room is opened and when deliveries are dispatched.
2. Damage and expiry
Crushed cartons, leaking containers, goods spoiled by heat or power cuts, and items left on shelves past their date. Expired stock is a regulatory risk as well as a loss: in February 2026 NAFDAC sealed 18 warehouses in Bida, Niger State, holding expired food and beverages it valued at over ₦100 million, and urged the public to check expiry dates.
- Rotate stock so the earliest expiry sells first; see FIFO stock rotation for perishables.
- Check dates on every delivery and refuse short-dated goods you cannot sell in time.
- Store heavy items low and liquids away from paper goods.
- Record every damaged or expired item on a write-off sheet, approved by a manager, before it is thrown away or returned.
3. Supplier errors
- Count deliveries against the invoice before signing, with the driver present.
- Write any shortfall or damage on the delivery note and have the driver sign it.
- Weigh or measure goods sold by weight.
- Do not let the person who orders also be the only one who receives.
4. Recording errors
Often the largest cause, and not a loss of goods at all, only of accuracy: sales not rung up, the wrong item code, a carton entered as a piece, returns not booked back into stock.
- One code per product and size, with barcodes where possible.
- Training for every till user on the most-confused items.
- A daily check that every delivery received has been entered.
- Look at surplus lines as well as shortages: a surplus on one item and a matching shortage on a similar one points to wrong codes, not theft.
A quick diagnostic table
| Pattern in the count | Likely cause | First control |
|---|---|---|
| Small, valuable items short | Customer or staff theft | Move behind counter; CCTV |
| Cash short against till report | Till theft or errors | One cashier per drawer; shift cash-up |
| Whole cartons short after deliveries | Short delivery or loading theft | Count on receipt with driver |
| Surplus on one line, shortage on a similar one | Wrong item codes | Recode and retrain |
| Losses rise in hot months or after power cuts | Spoilage | Storage and rotation |
Staff deductions: what the Labour Act says
Many owners want to deduct shortages from wages. Section 5(1) of the Labour Act bars deductions from wages for fines. A reasonable deduction for injury or loss caused by a worker's wilful misconduct or neglect is allowed only with the prior written consent of an authorised labour officer. Deducting a till shortage from salary without that consent risks breaching the Act. Note that the Act's definition of "worker" excludes people in administrative, executive, technical or professional roles, whose contracts govern instead.
Accounting for it
Write missing and damaged stock out of the books when you find it. IAS 2 requires inventory to be written down to net realisable value item by item, and the write-down is an expense in the period it occurs. Keep count sheets, write-off approvals and incident notes; s.31 of the Nigeria Tax Administration Act 2025 requires records to be kept for at least six years after the year of assessment. Start with a sound monthly stock count; restaurants will find more in cutting food waste and stock loss.
Where Pryme fits
Less cash at the till means less cash to go missing. Pryme bank-transfer checkout lets customers pay by transfer free of charge, with each payment recorded. For riders collecting payment on delivery, see cutting rider remittance risk.
Questions people ask
What is stock shrinkage?
The difference between the stock your records show and the stock you physically have, caused by theft, damage, expiry, supplier errors or recording mistakes.
What is a normal shrinkage rate for a shop?
There is no official Nigerian benchmark. Measure your own rate monthly as missing stock at cost divided by sales, and investigate any rise.
Can I deduct missing stock from my staff's salary in Nigeria?
Section 5 of the Labour Act bars deductions for fines and allows a reasonable deduction for loss caused by wilful misconduct or neglect only with prior written consent of an authorised labour officer.
How do I stop staff stealing from my shop?
Separate duties, give each cashier their own drawer with a shift cash-up, require approval for voids and refunds, use CCTV at tills and the store, and count stock regularly with mixed teams.
Sources
- Labour Act (Cap 198 LFN 1990, now Cap L1 LFN 2004), full text · accessed Oct 2026
- Nairametrics: NAFDAC seals 18 warehouses in Niger over expired food products (20 Feb 2026) · accessed Oct 2026
- IFRS Foundation: IAS 2 Inventories (2024 issued standards) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (s.31, s.57, s.102) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.