On June 2, a video from Anhui TV's Science and Technology Channel was aired on Fengtai Xiaoyu Net, revealing that Anhui Fengtai County Xingyue Industry and Trade Co., Ltd. had uncovered an 'inside ghost'. Salesman Yuan, over three years, used fraudulent means such as forging IOUs in customers' names, underpaying or not remitting payments, and fraudulently obtaining wine to resell, illegally profiting over one million yuan from the company. Police investigation revealed this was not an isolated case; other salesmen had similar issues, causing total direct losses of over three million yuan.

Root Cause One: Chaotic Financial Management is the Fundamental Issue

When police asked Yuan whether the company's finance department had ever suspected him, Yuan said that although the finance department checked accounts once a month, they basically just asked questions and didn't conduct detailed checks. It was this obvious financial loophole that gave employees an opportunity to exploit.

In fact, employees using improper means to profit from the company is not unique to this wine distributor. Wine distribution companies often start as family businesses, and in the early stages, financial processes are relatively simple. In the early days, the boss's family members or relatives often handled finances, believing that money is safer when managed by family. In the early development of a distribution company, financial work was basically just keeping a simple ledger, which could be done without professional knowledge. However, as the company grows, the workload increases and the content becomes more complex. If the financial staff lack professional skills, observational ability, and experience, it is difficult to effectively detect employees who are up to no good behind the scenes.

Regarding this phenomenon, Mr. Pan Wenfu, chairman of Senpan Consulting, suggests that distributors can hire full-time financial personnel or financial advisors. By hiring full-time financial staff to standardize financial processes, or hiring a sufficiently senior professional financial person (especially retired accountants from institutions) as a part-time advisor to participate in some financial work, they can effectively improve the financial management of the distribution company and effectively control financial transactions with the company, salesmen, and terminal outlets.

Root Cause Two: Emphasis on Performance, Neglect of Salesman Quality Training

To do business, one must first learn to be a person; integrity is the most basic quality. Because distribution companies focus more on product operation and market share improvement, they often rely on performance; in employee management, they tend to favor performance incentives and sometimes neglect employee quality training. The incident at Fengtai County Xingyue Industry and Trade Co., Ltd. had chaotic financial management as the root cause, and neglecting salesman quality training as another main reason. Yuan first discovered the loophole when he underpaid for goods, then later forged IOUs in the names of terminal outlets to misappropriate funds, with amounts growing from small to large, from buying daily necessities to buying cars and houses. This is a failure of company management and also a black hole of employee self-control.

In this regard, Mr. Pan Wenfu, chairman of Senpan Consulting, suggests: regularly train sales personnel, strengthen business process and standardization construction, and do not use grassroots sales personnel for more than three years (business standardization can enable new employees to get up to speed quickly, avoiding employees relying on seniority and similar account backlog issues).

Root Cause Three: Loose Management and Lack of Effective Communication with Terminals

When Jiushihui reporters further investigated, they found that in addition to the main wine sales business, most distribution companies are also investing in other industries, causing the company's leaders to be distracted and manage the wine business loosely. Police also found that besides Yuan, three or four other employees were involved, showing that the problem had existed for a long time. The fact that it went undetected for so long is related to the boss's lax management and deficiencies in the company system.

Xingyue Industry and Trade lacked direct communication with terminal bosses, resulting in information asymmetry. This is also one of the problems many distribution companies currently face. Many distribution companies have been troubled by being constrained by salesmen, especially excellent ones, because these salesmen have influence at terminals and control a batch of terminal resources. Once a salesman leaves, the business at these terminals is affected.

In this regard, Mr. Pan Wenfu, chairman of Senpan Consulting, suggests that distribution companies should set up a dedicated telephone customer service to regularly contact terminal bosses in the company's name, learn detailed information about terminal bosses, and maintain customer relations on meaningful days such as holidays, bosses' birthdays, and family members' birthdays. At the same time, they should maintain normal communication with terminal outlets, including business transactions, fee settlement, and account verification, to effectively avoid unnecessary account disputes between salesmen and terminal outlets during business processes, and also help the company cooperate well with terminal outlets.

Source: Jiushihui

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