Here are some steps to take to help prevent embezzlement.

Embezzlement is not restricted to big business –
Don’t let it happen to you !

As entrepreneurs, we work hard for our money, and the last thing we need is to have it disappear due to fraud, hackers, or identity theft.  Some people have called 2013 the year of the hacker, which is worrisome.  But you’re far more likely to experience risks with disgruntled or financially desperate employees and contractors.  Mistakes happen, too, and when they do—it  can be costly to get them corrected.

Here are five ways to increase your financial controls so that you can lower your business risks when it comes to the handling of cash and cash equivalents.  As you read the list, check to see where you can tighten up controls in your business.

Checking for Checks

Do you have blank checks lying around?  If so, reduce the temptation and lock them up.  You can also go a step further and have your accountant run a report each month (or week) of missing check numbers.  If any checks are unaccounted for, and you’re unable to locate them, take action by processing Stop Payment orders at your bank.

Bank on It

If you are still getting your bank reconciliation on paper, where does it get mailed?  The business owner should always see the bank reconciliation before anyone else does.  Also, make sure the person that performs the reconciliation is not the same person that deposits the checks.  Segregation of duties is essential to improve cash controls.

Today, it’s a good idea to do all your banking online, if possible, so that nothing gets mailed.  In that way, you have some reduced risk over identity theft through statements stolen from the mail.

Some banks offer multiple-user access to your banking account, so that bookkeepers can get the information they need.  Lock that user ID down as much as possible, so that the user can only get the information that they need to do the job.  If they’re honest, they will appreciate the reduced level of responsibility and consider it a smart financial move; and they will understand the importance of systems control.

PayPal Protection

If you have a PayPal account, keep the balance low by transferring funds frequently to your bank account.  You can also restrict access to reduce your risk.  PayPal accounts need to be reconciled monthly—same as any other checking or savings account.

Credit Card Control

If you use credit cards in your business, you’ll want to maintain tight control over them.  For each employee or contractor that needs to charge items on a credit card, here are a couple of points to consider:

  • If the credit limit on the current card is sky-high, then ask the bank to lower it or set up a new card with very low credit limits just for employee use.
  • Contact your credit card company and get a card in the employee’s name so that you can more easily track his/her specific purchases.
  • Make sure you can access the credit card transactions online; and if necessary, you can closely monitor what’s going on.
  • Insist on a receipt brought to you for every purchase.
  • Create clear procedures, limits, and approvals before the spending occurs.
  • Don’t let the employee keep the credit card during off hours.  Lock it up on your premises instead.

Safeguarding Payroll

One of the biggest cash outflows for small businesses is payroll.  Here, segregation of duties comes into play again.  The person preparing the payroll should not be the one who approves it and actually runs it. You can do this by having different user accounts and controls within your payroll system.

Hopefully, you already have a lot of these ideas in place.  If not, add the ideas you like to your to-do list so that your business risks will be reduced and you stay safer!  Let us know how we can help.

Join to newsletter.

Curabitur ac leo nunc vestibulum.

Thank you for your message. It has been sent.
There was an error trying to send your message. Please try again later.

Continue Reading

Get a personal consultation.

Call us today at (555) 802-1234

Request a Quote

Aliquam dictum amet blandit efficitur.