There are many ideas for improvement and today I am going to start this series of my blog by giving an overview of the area which is first on my list to help you improve your bottom line. Let’s talk about protecting your business while placing some easy controls. How many areas in your business are you not measuring? From internal controls to process controls, there are many areas for improvements.
Today, I will be discussing internal controls which deal with fraud. Do you feel like all of your employees have high integrity and respect for you? Are any of your employees risk takers? I know you feel like they are all like family, right? I am here to tell you the biggest reason there is fraud in the small business is because most owners just don’t pay attention. This is a common problem because, as the owner, you are so busy making things happen, you don’t think about someone doing you wrong. Here are a few things you can do to quickly get a sense that everything is going as it should.
- Are your employees getting minimum wage but driving a high end car? Maybe they take a lot of trips that cost dollars. If you are asking yourself, how can they afford that? Take a closer look.
- Is there an employee that is disgruntled with you or their job?
- Do you segregate duties? The person opening the mail, recording the deposits in your books, and making the deposit to the bank, should NOT be the same person.
- Ask for or run an Accounts Receivable Aging Report monthly and quickly review it to see if there are customers past due that surprises you.
- Ask for or run a Profit and Loss Statement Quarterly which compares last year to this year. Look at the differences. Question any large differences.
- Enter a budget into your books and compare your budget to your current financials.
- Keep track of your blank checks. Have your Payables clerk to list check number ranges and manual checks on a list.
- Personally sign all checks, require the invoices to be attached to them, and be sure all checks are accounted for by comparing to the listing from above.
- Don’t keep unused checks in an unlocked drawer. Keep them in a secure environment.
We don’t want to think about embezzlement, but the fact is, it does happen. Take some steps to be sure. It will only take a few minutes of your time.
internal Controls-Large companies have yearly audits and internal controls are always a focal point. There is always a threat not only of embezzlement, but have you thought of the controls between your systems? Data being passed between your ERP and your Accounting Software for instance? I will discuss both.
1. Inventory Controls-Where do you start and how to see if your changes are working. How does access play into your manufacturing process. Are you losing processing time while employees are looking for the materials to use?
2. Bar Coding Controls-How can bar coding help you get your control back. What solutions are out there and how much difference can it make to your processes.
3. Procurement Controls –Is your business getting more than one quote? Are you duplicating purchases because of lack of visibility of your inventory and your needs? I will show you how your ERP system can help. I will also discuss Vendor performance and what you should be watching.
4. Employee Controls-Are your employees contributing or are they causing a bigger issue? I will discuss the steps to get your employees to become team players.
5. IT Controls-Controls on systems and data are critical. I will be discussing some solutions to get back your control of system access and system use.
Using these guidelines in your business can make you sleep better at night.
Written by: Susan Faulkner, small ERP business specialist