Every so often when speaking with a potential new client about their bookkeeping needs, they mention adding me to their accounts so I can pay the bills for them. I thank them for their trust in me, but state that I will not take on signing privileges or accept full access to their bank accounts. I take pride in being an honest, ethical, trustworthy bookkeeper and person, and as such believe that having that kind of access takes away some of the benefits of hiring an outsourced bookkeeper.
Over the years I’ve worked with a few business owners who had given over such access to a bookkeeper or employee and found themselves the victims of fraud, thousands of dollars were misappropriated. I was brought in to clean up the accounts after the fact. These business owners were guilty of nothing more than placing too much trust and access in the hands of someone who wasn’t able to resist temptation when personal circumstances got difficult.
So how do you protect yourself and your business, while still growing and delegating? There is always going to be risk involved, but you can mitigate it by taking a very simple step.
STAY INFORMED. If you are going to give someone in your company authorization to sign checks, access to a company credit card, and/or the ability to transfer funds, make sure you continue to know what is going on in your accounts. I’m not saying you need to do your own bookkeeping, but there are ways to remain knowledgeable about what is going on with your books and your money.
- At least once a week, go online and check your accounts. Look at the monies coming in and going out. Does everything make sense? Ask questions. When employees know that you are paying attention they are less likely to succumb to temptation.
- Open your bank statements when they come in. Don’t let the person who is writing & signing the checks reconcile to the statement without you looking at it first. If you don’t see and/or sign a lot of the checks issued in your business, make sure your bank statement includes copies of the processed checks. It may cost you an extra couple of dollars per month, but it is worth it to know that your checks are being issued properly.
- Check with your bank to see if you can limit the dollar amount a signer is allowed to authorize. Do the same with the credit card company if you have given a company card to an employee. Setting maximum dollar limits can limit temptation.
- Use online bill pay through your bank, and set up the employee to be able to create payments but only you can authorize them to be sent.
- Have an outsourced bookkeeper or bookkeeping firm do the monthly reconciliation and financial statements. They have no emotional stake in the accounts, and can look them with a completely professional eye. A professional bookkeeper will spot trends, pick up on changes in cash flow that haven’t already been talked about, and will question charges and withdrawals that seem “off” or unusual. Like with #1, knowing there is oversight, will prevent most people from giving into temptation. And if an employee does give into temptation, it will be caught quickly and the damage can be minimized.
Implementing these few checks and balances will ensure that your money is going where you want it to, that transactions are being entered correctly, and that you are making decisions that will move your company forward.