Part-time CFO | How To Eliminate Fraud Risks In Small Businesses
Industry Canada says that 50% of all businesses are out of business in five years, and that 29% of them will say the reason why they failed and business is that they ran out of cash says part-time CFO. Because cash flow problems are so prevalent in small business, business owners can use all the help they can get when it comes to protecting their cash. One of the ways that business owners can do that is by eliminating the fraud risks they have in their own business. Many business owners do not realize how many fraud risks exist in their business. By helping business owners understand what fraud risks exist, they can easily minimize and eliminate them altogether. Business owners that are protected from in-house fraud risks, can focus on running their business instead of worrying about their staff which can help them grow their business.
Many business owners often only have one person in charge of their accounting and finance says part-time CFO s. They have their own filing system that no one else is familiar with, or the records are out of date, and even though nobody else seems to know what that person is doing, that person seems very confident in their abilities and then all of a sudden business owner realizes money is going missing. This is unfortunately an extremely common scenario that more businesses are facing than ever before. Business owners need to be very proactive in minimizing and eliminating fraud risks in their business. One of the easy ways that they can do this is by having two people assigned to all financial tasks. The reason why this eliminates risk is because when more than one person is looking at finances, and makes it much more difficult for another dishonest employee to perpetuate fraud. Not only can you protect the business from fraudulent charges, but it can also minimize the effect of that employee making mistakes and not getting caught. These mistakes can add up big time later, or result in increased accounting fees when the accountant has to fix those errors. Itís a great idea for businesses to have more than one employee work on the file at a time says part time CFO. Business owners may also want to consider that this is a great way that employees can also be protected against being accused of fraud. If there is always to people looking at a file, everyone can be held accountable and be protected.
Another way that having two people and financial tasks can protect business owners says part-time CFO, is when running payroll. The reason why having only one person on payroll is a risk, is because that one person can commit a variety of payroll frauds. One of the most common payroll frauds that exists, is been employee adds hours to their timesheets, and wages per hour. They often donít even think of it as and without two people working on their account, they can easily defraud a company.
Business owners need to consider that itís very poor and to have regular on-site meeting with their accounting team every month says part time CFO. Many business owners see this is a waste of time or money, however this easy chicken system can help business owners not only answer questions and ask their own questions, but it can help the accounting team catch errors or instances of fraud as itís happening, instead of only catching fraud because someone has noticed that there are several thousand dollars missing.
Ways that business owners can be sure that they are protecting themselves against fraud is by eliminating the petty cash fund in their business. Part-time CFO says that this is an extremely outdated practice thereís virtually no reason why any businesses would need to carry cash on hand anymore. Anything that a business may need to purchase to the course of a week can either be done with electronic payment or with bankcard. By completely eliminating the petty cash fund in favour of a debit card, business owners can only eliminate fraud risk in their business immediately, but also eliminate an audit helping of their petty cash fund, which can be extremely difficult to go through, since many businesses donít keep accurate records of what is purchased through petty cash. Business owners can get their banks to lock the car down so online purchases cannot be made with it, as well business owners can as their bank to put a daily limit on the card, so that even if fraudulent purchase happens on its, it is less likely to amount to very much. Instead of losing a few thousand dollars, a business owner ends up losing few hundred dollars.
Another way that businesses can demise fraud risk within their business, is by outsourcing their payroll to a third party provider. Simply by outsourcing payroll, business owners can completely eliminate people fraud is a risk to their business says part-time CFO. there are so many ways that an employee can commit payroll fraud, that even by having two people were company will at the same time, there still possesses a little risk. Business owners can choose what they want to minimize the risk or completely eliminate it. Third party payroll processing companies are very cost-effective, and can put a businesses mind at ease very easily.
Business owners can protect themselves against fraud within their business says part-time CFO, is being very careful with the checks and their business. The reason for this is checks are often used fraudulently, and while business owners assume that their bank is being very careful in checking signatures for every check that get sent to the bank, this is actually not the case. Banks rarely if ever check the validity of text they receive, only looking into things if attention is called to it. Because of this, business owners should treat all checks in their business as carefully as they treat cash. Therefore they donít leave them laying around, they lock them up or deposit them directly into the bank as soon as possible.