Part-time CFO | How Small Businesses Can Avoid Fraud Risks
Many entrepreneurs are completely unaware that they are at risk for being defrauded in their own company by their own staff says part-time CFO. This is a completely avoidable situation in several circumstances and there several things that an entrepreneur can do to avoid becoming the victim of fraud in their own businesses. Since cash flow problems are one of the main risks that business owners face while operating their businesses, fraud should not be one of the reasons why they run out of cash.
One of the first ways that business owners can eliminate fraud risk in their business, is to have more than one person on their accounting or financial tasks. The reason for this says part time CFO is by having two people working on finances it reduces the probability that one of them will try to commit fraud because they are being watched. Not only is this very effective for automating fraud within a business, it also can help reduce the number of errors. Even if an employee does not intend to steal from the company, by not having someone to double check their work can leads to many costly mistakes that can be avoided. Having two people work on things, business owners can be assured that not only will the greatly reduce that risk of being the victim of fraud, but also they can avoid paying for costly errors. If business owners donít believe that they can financially afford to have two people working on tasks, a great option can be to outsource all financial tasks as possible. By having an outside company work on those financial tasks, business owners can completely eliminate the risk of being defrauded in their company.
Payroll is a very large way that employees can defraud the company says part-time CFO. They can inflate their earnings theory easily. The way they would do that is that they can either inflate the number of hours that theyíve worked therefore increasing the amount of money they get paid, or they can increase the wages they get per hour. Often this kind of fraud happens in small increments over a significant period of time and can add up to hundreds of thousands of dollars over the years. By outsourcing payroll to a third-party company, or by having two staff members work on payroll at a time, business owners can completely eliminate this risk in their business.
Another way that payroll can be a way that companies are defrauded says part time CFO, is when employees use payroll remittances to commit fraud. They would pay CRA more remittances in their name than is necessary. During text time, CRA will see that the employee has paid to many remittances and will get issued a check. The problem with this is that the check is issued to the employee specifically and not the company. The employee pockets that money, and the company has been stolen from. This is extremely hard to catch once itís been done, the only way would be if business owners calculated by hand all of the remittances, double check them against what had been paid.
Unfortunately there are several ways that entrepreneurs can be the victim to fraud right in their very own business says part-time CFO. Luckily, there are easy ways that businesses can avoid becoming the victim, or significantly reduce their risks. By knowing all of the different ways that they could be the victim of fraud, and allow business owners to make the necessary adjustments in their business to minimize or completely avoid those risks.
One of the most significant ways that a business owner can avoid being defrauded in their business is to have more than one person assigned to a financial task at a time. Many business owners donít believe that they have the money in order to pay for two employees to do one job, but business owners need to consider what is more expensive, paying for an additional person or having money stolen. If business owners donít want to entertain the thought of hiring another person, they can also outsource that financial task. Almost anything that a business owner can do in the house for finances can be outsourced says part-time CFO, and it can often be extremely cost-effective. Having their financials being taken care of by a third-party company can completely eliminate the risk of fraud in several circumstances. This way can free up their staff to work on other important jobs including billable tasks, which may be more advantageous for business owner in the long run.
Another way that business owners often fall victim to fraudulent activities in their own business says part time CFO is through petty cash theft or abuse of the company credit card. Part-time CFO would cost any entrepreneur from having petty cash in their business. It is no reason why businesses should need to have cash on hand in their business, most anything that a business would need to buy can be purchased either electronically or with the card. Not only does eliminating petty cash eliminate theft risk, it can also eliminate being audited on petty cash.
When business owners are getting rid of their petty cash, there several things they should keep in mind says part time CFO. The first thing they should consider is to get a company debit card. Business owners can put daily limits on that card as well as lock it down so that online purchases canít be made. If fraudulent activity happens on that card, business owners can rest assured that they are only out a few hundred dollars instead of potentially thousands.
Business owners should avoid getting staff credit cards, but often issuing a credit card is necessary says part-time CFO. In that case, business owners should only issue one card per employee and make sure that employee is responsible for all of the card credentials.