Loss, leadership buy-in, and the business case that keeps failing
Drones look cooler in PowerPoint slides than database fixes.
An investigative systems expert learned this managing systems across all of their company’s brands. The theft where local law enforcement sent a drone and watched the suspect change into stolen merchandise? People gab about that at conferences and dinners. Have you heard about the 15-minute database lag their team closed to stop a $1M fraud scheme?
Thought so.
But that’s where the expert’s role sits, at the intersection of total retail loss and budget reality. They evaluate tools by whether they protect sales and margin, or if they advance investigative effectiveness, and those tools don’t always generate executive attention. Because of that, they have to make the case to AP practitioners who live in fraud data and to business leaders who live in margin language.
The retailers who fund the right interventions figured out how to translate between those two rooms. The ones playing security theater leave a lot on the table.
Key Takeaways:
- Traditional AP positioning limits executive visibility. CFOs evaluate departments by profit protection versus cost drivers.
- Building Product Management credibility during normal workflows is what lets AP influence inventory system rebuilds instead of pitching after decisions are made.
- Receipted return controls address six times the dollar impact of GPS programs but can’t secure funding because they lack the narrative wrapper.
When leadership funds the 2% and ignores the 12%
Losses generating that attention aren’t doing the most margin damage. When you look at returns, the data is right there: of the 14.2% of returns that are abusive or fraudulent, 12% is abuse and only 2% is outright fraud. What’s missing is a story connecting return abuse to margin impact in CFO terms.
Tracker programs illustrate both sides of this. They get executive attention, “how cool is it that we’re putting trackers in merchandise”. But the reason it gets renewed and expanded is the 14% shortage decrease across the roughly 85 stores with trackers. The business case that sustains it is built on product recovery and shrink reduction, not on story value. Arrests are a bow on top. The margin impact is what actually funds the program.
The receipted-return case is stuck partly because it lacks that wrapper. There’s no drone. There’s no arrest. There’s a database query and a policy conversation.
Here’s where AI-powered decisioning enters the picture. Tools can flag high-frequency returners, bracketing behavior, and policy abuse automatically. They surface the patterns that make up that unglamorous 12%. But the technology only matters if AP can translate what the models detect into margin language finance leaders understand.
Think of it this way: AI is the metal detector at the beach. It beeps when it finds something valuable. But if you run up to people yelling “I got 47 beeps today!” they’ll walk away confused. Tell them “I found $840K worth of lost jewelry” and suddenly they want to know where you got the detector.
When the expert’s team does get leadership alignment, it’s because they’re framing the business problem rather than the solution:
- here is an unmanaged business risk
- here is what it’s costing us
- here is how we become less exposed
That framework weaves in elements like ORC, returns fraud and abuse, and shrink, all addressing how the technology impacts these.
Who owns the problem needs to be clear. When AP presents a fraud tool, business leaders see a cost center making a budget request. When AP presents a margin risk with a specific dollar figure, the conversation asks who is responsible for addressing it.
Go from report filer to funded AP team
Most AP teams can document the fraud. Fewer can explain why it matters to someone signing checks. The expert’s team leans on four structural pillars that separate teams who influence budgets from teams who justify their existence.
Lead with the business risk
AP teams that open with a technology pitch stay in the cost-center conversation. Teams that open with an unmanaged margin risk get to the budget conversation. The difference is framing, and it has to happen before the meeting.
When the expert’s team presents the current status quo as costing the business a specific dollar amount or increasing risk in measurable ways, finance leaders stop seeing a department asking for tools and start seeing a business problem that requires ownership.
As retailers reallocate IT budgets toward AI investments. AP positioning itself as already using AI to protect margin moves their funding from the shrinking IT budget to the AI investment that gets expanded.
Know the outcome of each loss
The dramatic cases are what fund the flashier programs like GPS implementation. Closing the gap requires AP leaders who are willing to make the unglamorous math as legible and attractive as the action story.
The expert is candid about this tension: the receipted-return problem is harder to storytell than a drone-assisted theft recovery, but the dollar impact is significantly larger.
That means translating “we blocked 2,347 suspicious return attempts” into “we protected $840K in margin across three product categories.” When leadership hears numbers tied to margin impact rather than investigation metrics, they start asking questions like “what happens if we don’t approve this?”
Identify who actually makes the pitch
If the person who best understands the fraud and abuse mechanic isn’t in the room when the budget decision gets made, the business case is less likely to land with decision-makers.
The expert is typically not in the receipted-return pitch meetings. AP Leaders carry that conversation. Getting closer to that conversation is a structural priority, not a secondary one. The retailers who solve this build AP leadership teams that can speak both languages fluently: the fraud mechanic and the CFO case.
Build cross-functional relationships before the crisis
“One thing I’m really proud of is we have a really, really good partnership with our Product Management team, most specifically with our POS team,” the expert says.
The partnerships that allow AP to route systemic problems to the right technical team are built in ordinary workflows. When those relationships don’t exist, the escalation goes to a queue. When they do, it goes to a conversation.
The expert’s team was able to influence a database change that stopped a massive fraud scheme because they had already established credibility with the PM team.
The next wave of cross-functional opportunity
One of the company’s brands aims to have its entire fleet 100% RFID-enabled by end of Q2 2026. The business case was built entirely around inventory accuracy. But the expert sees what it makes possible: if RFID tells the system that an item was never sold, Engage can block a return on that item at any location.
AP doesn’t have to win every room. They just need to recognize the opportunity and secure a seat at the table before someone else defines the use case without them.
ORC scope is expanding and legislative attention on retail theft is increasing, which creates more law enforcement partnership opportunities for retailers with strong intelligence-sharing practices. Solution providers are doing more integrations with each other than they were three years ago. AI governance infrastructure is being built inside major retailers before deployment.
AP teams without cross-functional credibility will keep pitching after decisions are made. Teams with it will be in the room when RFID gets defined, when AI governance gets scoped, and when inventory systems get rebuilt.
Frequently asked questions:
Why do CFOs fund fraud detection programs but not return abuse prevention?
CFOs fund initiatives that protect margin with measurable results. Fraud detection, especially high-profile cases involving arrests or recovered merchandise, creates clear narratives that generate executive attention. Return abuse, which represents 12% of problematic returns compared to 2% outright fraud, lacks that narrative wrapper despite causing significantly more margin damage. The difference lies in how AP teams present the business case. Programs that translate detection metrics into margin language gain budget approval.
How do AP teams move from cost center to strategic partner in budget conversations?
It happens when AP starts presenting unmanaged margin risks. Instead of asking “can we buy this technology to address shrink?” the question becomes “here is an unmanaged business risk costing us X dollars annually—who owns addressing it?” When AP reports to legal or finance rather than operations, conversations naturally shift from investigations completed to margin points protected. Cross-functional relationships built before crisis moments allow AP to route systemic problems to the right technical teams and influence decisions like RFID deployment, AI governance frameworks, and inventory system rebuilds. This secures proactive inclusion in strategy discussions rather than reactive budget requests.
How can AP teams position themselves to benefit from RFID and AI investments already happening?
Major retailers are deploying RFID for inventory accuracy and building AI governance infrastructure before rollout—both creating opportunities AP didn’t initiate but can influence. When RFID confirms an item was never sold, return authorization systems like Engage can block fraudulent returns at any location. When AI-powered decisioning surfaces high-frequency returners and bracketing behavior automatically, AP teams who translate those patterns into margin language (not investigation metrics) secure funding. The difference between teams who benefit and teams left behind is cross-functional credibility built during ordinary workflows. AP leaders who already have established relationships with Product Data Management, IT, and finance teams get invited to define use cases. Those without credibility pitch after decisions are made.
How are retailers repositioning AI investments in asset protection budgets?
Retailers are expanding technology budgets for AI-powered tools that deliver measurable business outcomes. This creates a positioning question for AP: does leadership see your department as part of the AI strategy or as a legacy cost center? AP teams using tools that automatically surface return abuse patterns, flag bracketing behavior, and detect policy violations are already deploying AI-powered decisioning. The difference is how it’s presented. When AP frames these capabilities as AI protecting specific dollar amounts in margin annually, leadership includes the department in expanded technology investments. When AP presents the same tools as “fraud detection software,” they compete for shrinking discretionary budgets. The change requires translating what the technology does into what the business gains.
