How to Stop Profit Pilferage in the Plumbing Business?

Yogesh By Yogesh

Profit pilferage in plumbing—a stealthy menace lurking within the plumbing industry, draining resources and undermining business success. It’s a problem that demands attention and action, as we look at how you can stop plumbing leaks that erode the profit.

The plumbing business, like any other organization, faces unique challenges when it comes to managing and preserving profits. Especially when around only 35% of a plumbing business’s revenue is profit, a pilferage only brings this number further down.

Whether it’s inventory shrinkage, inefficient project management, or overlooked operational costs, the impact of profit pilferage can be detrimental to the long-term success of a plumbing firm. Understanding the underlying causes and implementing preventive measures is essential to maintain a thriving enterprise.

In this blog post, we will explore the insidious nature of profit pilferage in the plumbing business, delve into its detrimental effects, and present a range of effective solutions.

By implementing these solutions, business owners can safeguard their profits, maintain employee morale, and enhance customer satisfaction. Let’s first explore some causes of profit pilferages.

Also read the blog: Top Signs Your Plumbing Business is Leaking Profit

Essential steps to prevent profit pilferage

Preventing profit pilferage is crucial for any plumbing business. Here are some essential steps that waterwork owners can take to minimize the risk of profit pilferage:

Establish strong internal controls

Establishing strong internal controls is the foundation for preventing profit pilferage. It involves setting up policies, procedures, and mechanisms that ensure accountability and minimize the risks of fraud or misuse of company resources. Key steps include:

a. Segregation of Duties: Clearly define roles and responsibilities within your organization, ensuring that no single individual has excessive control over financial transactions. Separating functions such as authorization, record-keeping, and reconciliation minimizes the risk of collusion or errors going undetected.

b. Documentation and Record-Keeping: Maintain accurate and detailed records of financial transactions, invoices, receipts, and other relevant documentation. Proper documentation supports transparency, facilitates audits, and aids in tracking and identifying any unusual activities.

Conduct regular internal audits

Perform regular internal audits to review your business’s financial transactions and identify any discrepancies or irregularities. These audits should be conducted by an independent and qualified individual or team who can objectively assess your financial processes and identify potential areas of concern. It helps to detect and address any issues promptly, reducing the risk going unnoticed.

Implement effective inventory management

Pipefitting services often have a significant amount of inventory, such as pipes, fittings, and tools. Implementing an efficient inventory management system can help to stop plumbing leak products pilferage. This involves accurately tracking inventory levels, conducting periodic physical counts, and implementing security measures to prevent unauthorized access to the inventory.

Have a clear code of conduct

Develop a comprehensive code of conduct that clearly outlines the expectations and ethical standards for all employees. Communicate this code to your team and ensure they understand the consequences of engaging in any form of profit pilferage. Regularly remind employees of the importance of integrity and ethical behavior.

Screen and Train employees

Each year, employee theft costs businesses a staggering $50 billion, according to data from the U.S. Department of Commerce. Don’t let your plumbing business suffer on account of pilferages and become a part of this loss. Training and screening employees is thus an urgent need.

Thoroughly screen potential employees before hiring them, including conducting background checks and verifying references. Provide comprehensive training to all employees regarding financial processes, inventory management, and ethical behavior. Emphasize the importance of honesty, integrity, and the potential consequences of profit pilferage.

Reward employees who exhibit ethical behavior and contribute to the prevention of profit pilferage. Encourage open communication channels, team collaborations, and regular performance reviews to ensure everyone is aligned with values and goals.

Implement secure cash handling procedures

Cash handling is an important accounting step, which going unmonitored gives room to fraudsters to manipulate amounts. Even though the world is growing digital, cash transactions continue to prevail.

As a result, if you’re dealing with heavy cash transactions, establish secure cash handling procedures. Here, establishing cash registers, using numbered receipts, conducting regular cash reconciliations, and limiting access to cash to only authorized personnel are key steps to bring in.

Utilize technology and software solutions

Leverage technology and software solutions to streamline and monitor your business operations. The best way is to implement a bespoke plumbing management software that provides real-time visibility into your financial transactions, inventory levels, and works.

Further, use security systems, such as video surveillance cameras, to deter potential theft and monitor employee activities. Technology always serves as an effective medium to prevent revenue leakage as it improves transparency and enables better control over business processes.

Encourage reporting and whistleblowing

Create an environment where employees feel comfortable reporting any suspicious or unethical behavior. The important step here is to establish a confidential reporting system, such as an anonymous hotline or email address, where employees can report concerns without fear of retaliation. You must investigate and address all reports promptly and take appropriate action when wrongdoings are discovered.

Regularly review financial reports

Based on research conducted by MGI, it is estimated that approximately 42% of companies encounter instances of financial leakage. Furthermore, EY’s research indicates that each company experiences a loss of 1% to 5% of realized EBITA annually due to leakage.

To prevent your plumbing business from witnessing such loss, review your financial reports regularly to identify any anomalies or trends that could indicate profit pilferage.

Ongoing monitoring and analysis

To stop plumbing business leakage, make an ongoing effort that performs continuous monitoring and analysis of financial data. Consider the following practices:

Establish key performance indicators (KPIs) related to financial performance, such as revenue growth, profit margins, and expense ratios. Regularly monitor and analyze these metrics to identify any unusual patterns or deviations that may indicate profit pilferage.

Conduct periodic risk assessments to identify potential vulnerabilities and emerging risks within your organization. Assess the effectiveness of existing controls and make necessary adjustments to mitigate new threats.

Lead by example

As the owner of the plumbing business, lead by example and demonstrate the highest standards of integrity and ethical behavior. Your actions and attitude towards profit pilferage will influence your employees’ behavior. By consistently upholding ethical practices, you create a culture of honesty and integrity within your organization.

Remember, preventing profit pilferage requires a combination of effective policies, processes, and ongoing vigilance. By implementing these steps and maintaining a focus on integrity, you can significantly reduce the risk of profit pilferage.


Profit pilferage is a significant concern that can erode the financial health and stability of a company.With a proactive and strategic approach, it is possible to curb and ultimately eliminate this problem. By implementing the above comprehensive set of steps, businesses can stop the plumbing leaks.

By using technology, plumbing businesses can prioritize integrity, transparency, and accountability. They can successfully build a reputation for reliability and trustworthiness, ultimately leading to sustainable growth and profitability.

At FieldCircle, we are transforming how plumbing companies manage their operations using technology. Get in touch with us and avail our expertise for consistently improving your plumbing business ROI.

Book a Personalized Demo

Learn how your businesses can use FieldCircle to achieve more efficient, transparent, and profitable service operations.

30 Days Free Trial No Credit Card Required
Book a Personalized Demo

Book a Personalized Demo

By submitting your details, you agree that we may contact you by call, email, and SMS and that you have read our terms of use and privacy policy.