Safeguard your business while things are doing fine

Being able to trust your team and advisors is gold standard. Keep it that way and don’t make it easy for someone to abuse your trust. Think about these tips to safeguard your business and keep those trusted relationships strong.

Housekeeping

Good systems make it easy to understand and hard to hide things. If you have a system, make sure it’s documented. They don’t have to be complicated. For instance, when you refund a customer, make sure it’s signed off by a manager or yourself and recorded somewhere central. Checklists can make a system easier for staff to understand and work with too.

Have systems in place to routinely look at where your money’s going or that require you to sign off on key transactions.

Monitoring

Do you have regular reporting? Things to look for are unusual customer refunds or credits, a spike in new suppliers or payments to existing ones. Do your sales look right? Is there a dip in cash sales?

Know what benchmarks other businesses in your industry are hitting. Compare your profit to overhead ratios with theirs and question inconsistencies.

Buddy systems

Red flag any of your systems where only one signatory is required or only one person oversights income and expenses. Make it part of the monthly routine to run the bank statements by more than one pair of eyes. Consider whether training up ‘buddies’ to share key financial responsibilities might make it harder to siphon off funds unseen.

Buddy systems can strengthen your succession plans as well as taking the pressure off when a signatory takes holidays. Ironically, it seems that people engaging in suspect activity tend not to take holidays for fear of being found out as they know someone else is performing their duties.

Background checks

Reference checks are a truism of recruitment but it’s important to take them seriously. If you’re interviewing for a role with access to sensitive financial data or business assets, consider whether background checks are advisable, e.g. criminal record checks or confirmation of qualifications. Make sure background checks fall within legal requirements or you can fall foul of the Privacy Commissioner and/or the Employment Relations Authority. There are specialists who can provide this service.

Audit

While audit is a significant additional business expense and we don’t suggest it lightly, periodic independent financial reviews or spot checks might be worth considering, if only to let it be widely known that this is one of your resources.

We can help you with risk assessment for your business and help you strengthen your systems if needed.

 

 

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