You are working hard to grow your business, but are you aware of the steps you need to take to protect your business? Your business is an asset and should be protected against theft and other damage.
As a small business owner you might be wondering how you can do this or if you even need it. And yes, you do. Taking simple steps to prevent wrongdoing in your business will often pay off and help keep your peace of mind.
As you grow your business and add members to your team, you need to prevent fraud, embezzlement, or theft. According to the ACFE 2018 Small Business Fraud Report, 29% of small businesses are at risk for billing, 22% for payment by check and forgery, 21% for expense reimbursement, 20% for skimming and 16% for financial statement fraud.
According to the 2020 Report to the Nations, the three main control weaknesses that contribute to fraud are:
· Lack of internal controls.
· Exceeding existing internal controls.
· Lack of review by the business owner.
When business owners step away from their company’s financial system, their absence increases the opportunities for fraudsters. By curbing this temptation through the implementation of controls, you will be able to run your business with more confidence.
We like to trust our employees and find it hard to believe that an employee would do anything to harm us or the business, but when we trust too much, this is where problems arise. No one wants to believe that our trusted employees would steal from us, but when you implement the controls to prevent this, you can avoid finding out the hard way.
Here are some tips to protect your valuable assets:
1. Use internal controls
There are many types of controls you can implement in your small business to protect your business. You need to protect your business around record keeping, cash management, and bank accounts. Segregation of duties for employees is one type of internal control you can put in place in your business to prevent theft and embezzlement.
2. Set up checks and balances
Specific policies and procedures may prevent the opportunity from arising. Regular reconciliation of critical accounts is essential to ensure that there is no unusual activity in the business. Examine your bank and credit card statements in detail. Please ensure that these statements are sent to your personal email address to ensure that they reach you directly without interference. Question any unusual activity. Adopt a policy of signing and approving all outgoing payments for the business.
3. General IT controls
Having controls around your computer systems also provides protection. Access controls only give employees access to what they need to do their jobs. When you control the access to programs of team members in your organization, you minimize the duplication of responsibilities.
4. Regularly review your numbers
When you know your business numbers, you can quickly identify any abnormal activity within your business. You cannot verify the function of corporate finance as a business owner even if you have an accountant working with you. You need to monitor these numbers yourself at a high level to understand the financial activity of your business.
5. Physical control of tangible assets and documents
When you have an inventory control process to examine damaged inventory and perform sporadic inventory counts, essential papers and extra cash or valuables should be locked in cabinets or safes when they are not being used and keeping the suits secure.
The bottom line is taking preventative measures and protecting your business assets will allow you to run your business with more confidence, knowing that you have taken precautions to protect your business and its finances.