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Part-time CFO | Guarding Against Fraud Risks
Entrepreneurs may have only one person in charge of their accounting, and not know that this puts them at significant risk of fraud in their own company says part-time CFO. There are several fraud risks that exist in the business from inside, that business owners may not even be aware of. By being aware of these risks, business owners can take the necessary steps to safeguard themselves and their business against these fraudulent activities.
One of the ways that business owners can be the victim to fraud in their own business is through payroll. If there is only one person working on the payroll of the business, there are several ways that they can commit fraud. One of the first and most common ways is when the person looking after payroll inflates their wage per hour, or inflate their hours. This is very common and often employees donít even view this as theft. They increase their wage or their hours in very small increments, as to not draw suspicion says part time CFO. And when they donít get caught, they do this over extremely long period of time. Business owners often discover mistakes like this in the business after that person has been stealing money from them for years, resulting in hundreds of thousands of dollars lost.
Another way that dishonest employees use payroll to defraud the business that they work for, is when we use payroll remittances to perform fraud. This is a lot more difficult to catch, says part-time CFO. This is when an employee calculates the source deductions for CRA, and then adds a little bit more onto their own name. This ends up looking like that employee is making higher payments for their payroll remittances, and at tax time CRA will discover this and send a check back for the additional amounts paid. The problem with this is part time CFO is that the check for the extra funds goes to the employee instead of the business owner. The employee cashes the check and pockets the money, and to the business owner is out those funds.
While using payroll is an easy way for dishonest employees to steal from the company there working for, there is an very easy solution to it says part-time CFO. A business owner should have two people working on payroll at all times. A dishonest employee will not be able to be dishonest because they have someone else with them, and the risk is completely lowered. Another way that business owners can guard against this type of fraud, is by outsourcing their payroll. It is very cost-effective and it completely eliminates the risk of the people fraud in their business. Any business owners who want to be sure that they will never fall victim to pay will fraud in their business, can easily avoid it. Business owners who donít believe they canít afford either a second employee, or outsourcing a task, should consider the cost of being defrauded in their business. They have the potential to lose thousands of dollars over several years which is a risk thatís completely unnecessary.
A very common situation in small businesses is that business owners hire one person to be in charge of their accounting says part-time CFO. That person as a filing system that nobody else is familiar with or can understand, the records are out of date and business owners realize too late that money is going missing. This is a familiar story with several small businesses, but it is also a completely avoidable one. By being aware of all the fraud risks that business owners have within their own business, they can make changes in their business that can completely mitigate these errors and safeguard them against being defrauded.
One of the ways that business owners can advise the threat of fraud in their business is to ensure that any of the employees who are working on finances only have read-only access to the bank accounts. This is where they can see all the financial activity that is going on in the business ownerís bank account, but they canít disperse cash. This is a simple and easy way that Business owners can have only one person work on financial tasks, and work on them risk-free.
Another way that business owners can guard against fraudulent activities in their business is by using an electronic fund processer to schedule payments in their business. How this works says part-time CFO is that business owners set of the electronic fund processer to disperse cash on a set schedule, and that the business owner or the employee in charge of making payments organizes what payments will be handled ahead of time, and then that electronic fund processer sense of those funds on a set date and time. Because all payments are handled of time, business owners can easily do a double check. Itís also extremely easy to use because business owners can easily follow the cash trail in their business. It changes cash disbursements happening several times a day from the bank account to once a week or once every couple of weeks. This reduction of transactions through bank account makes double checking payments much easier.
If business owners are not able to pay for two people to be working on financial tasks, then they can outsource many financial tasks says part-time CFO. But the most common threat tasks to be outsourced is payroll. This allows the business owner to free up but employees times we can work on other jobs or billable tasks and completely eliminate the potential of the payroll fraud from happening. By simplifying a lot of the financial systems, business owners can make it much simpler and easier to do double checks in order to ensure that their staff are not stealing money or making errors. Business owners should also be aware that itís not just fraud that they should protect themselves against, but honest employees who make errors that go unchecked can create significant problems for businesses in the long run.