As your business grows you may have found that keeping control of who needs paying and dealing with invoices and payments has become too time consuming. The natural next step is to delegate this to a member of staff, a bookkeeper or accountant. But this does come with risks so you need to understand how to control those risks
Rule number 1 – two sets of eyes.
There is a simple rule used in big business who have a finance team – there must always been two sets of eyes on every transaction. What does this mean? It simply means that two people must be involved in either putting an entry on the accountancy system or paying money from the bank. Usually someone will process an invoice, journal entry or payment and some one higher up will then authorise or approve that transaction.Any decent accounting system will let you set up users with different access levels and your bank can let you set up people to set up transactions only.Never ever let anyone be able to pay money out of your bank without a second person having sight of this.
Rule number 2 – trust no one
As much as we want to trust people this is about removing temptation. I know I have been in situations as a finance professional when I have seen how easy it would be to take money from an organisation. While I would never take this opportunity (mostly because I don’t want to end up in prison or in exile from my loved ones), you never know when some is under financial pressure and takes that opportunity. When I did my training in financial services we learned that it can even happen when someone is being bullied by another person to take money. Once it is gone it is difficult to get back so please remove that opportunity.
Rule number 3 – check bank accounts to invoices
An easy way for money to astray is for someone to change the bank account for a supplier to their own. As part of your checks look out for changes in bank accounts.
Rule number 4 – training is essential
If you don’t have a finance background then it is worth investing in getting your team trained by a finance professional, overseen by yourself, so all the proper systems and checks are in place. See our Growth Services page for ways we can help with this.
Rule number 5 – regular reporting
While day to day checks are essential you may at first find that handing over control means you don’t feel you have a feel for the numbers. Having regular reports and meetings with your finance team means to you can keep up to date with the numbers. This can be a good thing as you will start to see the woods for the tress when reports have been prepared by someone else.
Rule number 6 – login in to your accounting package
Make sure you have access to your accountancy package and understand how to run reports and check details any time you want. Not only will this mean you have control over what is going on but it keeps people on their toes.
While some of this may seem onerous and distrusting it is an important part of growing your business so you can step away from the day to day admin and work on the business. Trust is a great thing but when it comes to money putting controls in place is key.
We offer full support from Xero software training to helping interview and train your finance team.