Recently our CEO, Greg Jones was interviewed by Michael Cohn from Accounting Today. He discussed the importance of being proactive about protecting your small business from fraud.
See the article below for some great tips:
BY MICHAEL COHN
Small business owners constantly need to be on guard against theft and fraud, which can be committed by both customers and employees alike.
But there are ways for small business owners to be vigilant. “First of all, you try to keep a division of labor,” said BookKeeping Express CEO Greg Jones, whose company operates a bookkeeping franchise. “You never want the same employee to have the ability to write checks and manage the books. You have two individuals instead of one.”
Even longtime trusted employees can get into the habit of taking a thousand dollars here and a thousand dollars there, he noted. “Over a 10-year period, you’re talking about $100,000 of revenues that are missing out of the organization,” said Jones. “That division of labor is important.”
“You’ve got to have something constantly monitoring the checks and balances internally,” he added. “Analyzing your monthly reports requires journal entry reporting. An owner or manager of the operation needs to make sure that they stay abreast, but a lot of people start skipping it because they don’t understand it or are not comfortable reading the numbers.”
Jones’s company, BookKeeping Express, offers this type of outsourced accounting expertise. “You’ve got to be analyzing that data every month to see where things are operating, and what you can be doing better within your own business structure,” he said. “More and more small business owners are looking to outsource rather than hire somebody and do it inhouse.”
One of his franchisees had a local restaurant client who discovered that over $300,000 had been embezzled by an employee who oversaw the books and took care of the financials.
Other techniques that Jones recommends are preprinted checks with preprinted check numbers for tracking ability. He also recommends having a business credit card and bank statements delivered directly to the business owner or the CEO of the company.
“You want to see it before anybody else gets their hands on it,” said Jones. “Get ahold of that and walk through it and look for anything out of line and then address it versus having it go to an employee internally.”
Another technique he recommends is spot checks. “If the employees know you constantly without notice do a quick internal audit, you keep them on their toes, and then typically they’re going to shy away from trying anything that’s going to lead to a theft and fraud situation. These are proactive activities that hopefully cut off and prevent the theft and fraud from happening. That’s what we advise our folks: Don’t wait for it to happen. Implement these strategies so you cut it off.”