Tips for Safeguarding Your Business
by Bernadette Johnson-Hairl
(Excerpt from Business Blueprint: A Small Business Owner’s Guide to Starting & Running A Business THE RIGHT WAY!)
Setting internal controls is often overlooked by small business owners because of the mistaken perception that they are only for large corporations. In your personal life, it is often the people in your inner circle who you need to watch closely. The same is true in business when it comes down to your employees. Fraud prevention starts with creating policies that specify monitoring procedures as well as checks and balances. You should never give any employee too much control or access. An accountant or auditor can help you build the control system you need.
Fraud comes in a variety of forms, ranging from credit card and check fraud to employee theft. Examples include: stealing assets directly or through fraudulent billing or check tampering, paying fictitious vendors, skimming petty cash, claiming unearned overtime, stealing inventory, or embellishing an expense report. Regardless of the specific form it takes, the potential for financial losses is tremendous, and fraud can threaten the overall stability of your business. I would like to point out some key habits you should have (or start making). These practices are crucial to developing and instituting strong and effective internal controls for your business:
Manage your business.
Sounds self-explanatory, but keep in mind that if you are not vigilant, undesirable activity is more likely to occur. Do not let your guard down and get so busy that you do not keep a sharp eye on your employees.
Be aware of what is unfolding in your office on a day-to-day basis. Many business owners are tempted to go to the golf course instead of the office. Now please do not misunderstand me — I believe in letting the business work for you, but I just do not believe in absentee business owners. It’s like allowing your child to raise himself because he seems to be responsible. Just as that responsible child still needs structure and nurturing, so does your business and your employees.
Keep an organized office.
This facilitates your management efforts immeasurably. I cannot stress how important it is to operate in order. I have seen and known of business owners who are by nature, unorganized. If organization is a challenge, then this is a skill you must work on. It might be necessary to hire a professional organizer (I have a client who’s an excellent organizer, if you need a referral!) Fraudulent activity thrives in a chaotic environment.
Guard sensitive information.
Have account statements and other financial information sent to your home address or a P.O. Box. Sensitive information should not be mailed to your business address, especially if your employees are charged with opening incoming mail. A post office box is the better option because of the restricted access factor, but in a pinch, your home address is an acceptable interim solution.
These are just a few simple tips you can implement today. Read my book for additional tips to help you formulate your internal control procedures.
Bernadette Johnson Hairl of www.BernadetteSpeaks.com is an accountant, author, business consultant, professional speaker, and trainer committed to “Keeping Small Business in Business.” She currently owns four successful companies, and has helped hundreds of small business owners across the country start, run and grow thriving enterprises. She has conducted training sessions for the U.S. Small Business Administration, and leads small business seminars year-round. Bernadette has helped workshop participants and clients alike avoid costly mistakes and save thousands of dollars in taxes.
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