Do you have the Proper Checks and Balances in Place?
As we continue to discuss how to add value to your business, this month we will focus on the financial operations of your Business.
Many successful business owners no matter the size of their company, or if they employ a bookkeeper or CFO, retain certain responsibilities, such as signing all checks or at a minimum approving all the check registers before checks are processed. An owner, I know, has grown his company to over 500 employees and continues to sign all the payroll checks. Why is this so important? The owner creates continuity with management and makes it clear he/she is still very involved in the daily operations. This type of participation is also an oversight tool.
Over the years, many business owners who have walked into our office have been victims of embezzlement. If you ask them how it happened, they will tell you that they let their guard down and allowed someone in the company to get too close. It is usually a trusted employee who you least suspect. Some ways to avoid this problem is to provide checks and balances such as:
- Reviewing the monthly general ledger and checking the gross profit to make sure your percentages remain close month over month
- Paying the bills or at least approving the register of payables and payroll to be paid
- Making the deposits from the accounts receivable payment list as well as the daily cash receipts
- Providing procedures for money coming in and going out
- Checking all accounting systems when associated employees are on vacation
Contact us for a one-hour complimentary consultation to learn more about adding value to your business.