Fraud Risk Avoidance In Business | Part-time CFO
There are many risks that businesses undertake when they start their own businesses part-time CFO. One of the risks that business owners actually donít think of very often but possesses a very real threat is fraud risk. Fraud risk is an extremely serious threat facing businesses, and often they donít even understand why their business is at risk. They can easily avoid risk in several areas and minimize risk and others as long as they know what they need to look for.
Often business owners only have one person assigned to a financial task in their business. Often this is because they donít have the money to pay for multiple people, or they donít understand why this is risky behaviour. But the reason why only having one person working on a financial task is significant. First reason is having a double check system helps keep employees honest. Business owners shouldnít assume that they have dishonest employees working for them, but safeguarding against it is important to. Having two people working on financial files at all times, helps minimize the ability to defraud the company. Not only does this double check system protect the business, but it also protects the employees. There is virtually no chance that an employee could be accused of fraud if they have two people working on a file at all times. Any employees that are working on finances without having that double check system should be concerned.
Another very easy way that businesses can avoid risk in their business is to be very careful how they handle checks in their business. The reason for that says part-time CFO is because many business owners believe that banks are checking signatures on checks, but this actually isnít the case. Business owners should treat checks the way they treat cash. Depositing them into the bank when ever possible and never leaving them laying around. By doing that, business owners can quite simply and easily avoid this risk.
Business owners can also minimize risk when they have a well-being run within the company because thereís several payroll frauds that can occur. One of the most common payroll frauds that have been a business is when the employee who is working on payroll inflates the earnings. Whether they increased the wage per hour they pay themselves, or inflate the number of hours they work, if there is only one person working on that task, it opens up the possibility that a business owner can very simply and very easily defraud the company. The business owner is too small and Have two staff members on that task either due to money concerns or lack of people concerns, business owners should know that there are companies that can do payroll for them for very reasonable rates.
Another payroll risk is when employees use payroll remittances to defraud the company. How they do that is when they are calculating the source deductions they need to pay CRA, they add additional funds onto their own name. At the end of the year, CRA sees that it appears there is more taxes paid by the employee, and sends them back refund.
50% of all businesses are out of business within five years says part-time CFO, and out of all of those businesses, 29% of them will say that they failed because they ran out of cash. This is an extremely serious problem, but is compounded when businesses are at risk for fraud. Itís very easy for business owners to guard themselves against fraudulent activities, but if they donít know what to look for, then they can be at risk and not even know it.
One of the most important things that a business owner can do is to have a monthly meeting with their accounting team. This can be a double check system, where accountants can bring information to the attention of the business owner, as well as allow the business owner to ask the accounts any pressing questions they have. Many errors can be caught in this meeting, itís very important that they meet. Any business owners believe they donít have time for something like this, but itís very beneficial says part-time CFO.
Business owners can also very quickly and easily eliminate fraud risks in their business by eliminating the petty cash fund. The reason for this is because there is no reason why a business owner should keep a cash on hand in their business. Not only is it a risk that business owners face in place can steal the cash, but any payments that a business owner may need to have their staff make throughout the course of the business, can be done with a bank card. Business owners can organize with their bank a bank card that has limited transaction amounts and a daily limit so that employees have limited access to the funds in the account to. If they do when any fraudulent charges to the card, a business owner can find out right away, and only be at risk for a few hundred dollars instead of significantly more.
Business owners often believe that credit cards are a great way that they can have employees pay for things in the business, the part-time CFO recommends avoiding credit cards whenever possible. Bank cards are great substitution for credit cards. But, if the business owner is going to use credit cards they need to be very careful that they donít have a credit card that several people have the credentials to. That way if fraudulent charge does appear on the credit card, a business owner will be able to tell very quickly who it is if only one person had the credential on that card.
By knowing what to look for, business owners can simply and easily avoid fraud risks with within their business. By avoiding fraud risks, business owners can minimize the impact to their cash flow and increase their chances of succeeding in business.