Hopefully you already regularly review your company’s cash accounts. Every business owner, and even most managers, should know where their cash is going to stop theft and improper expenditures. Haven’t you ever wondered where that fifteen-hundred dollar Keurig setup in the maintenance room came from?
So, if you’re reviewing your cash accounts, do you know what to look for? How are you supposed to know what every number should be? You won’t at first, but pick a couple of categories to start off with and watch the monthly numbers until you start recognizing surprisingly low or high numbers. Graphing them out (many kinds of accounting software can do this for you easily) can also alert you to unusual spending.
Another thing that you can do to reduce the risk of losses is to create “internal controls.” These are standard procedures that most companies use to prevent employees from having too much control over company money flowing through their hands. One example is to separate financial duties between multiple employees, such as requiring one person to prepare, one person to sign, and another person to reconcile checks. That’s an internal control.
Here are some other examples of internal controls:
- Require invoices to have an approval signature before payment.
- Make sure that different managers choose and confirm new vendors.
- Require that managers sign off on their subordinate’s expense reports.
- Require two signatures for each check.
- Keep a list or ledger of checks and reconcile them with your bank account monthly.
- Make sure that arriving checks are endorsed with a bank stamp as soon as possible.
- Personally open bank statements and other financial mail.
- Monitor online access to your business account.
- And finally a familiar one: Review your bank statements & cash accounts regularly!
If you’re looking for more internal controls, or if you’re looking to ones specific to your business, please contact us for more assistance.