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E-Myth – “Why most small businesses don’t work & what to do about it”

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Part-time CFO | Minimizing Fraud Risks In Business

Thereís many challenges that businesses face in business today says part-time CFO, and running out of cash is the more significant ones. Business owners can increase their odds of not running out of money, by ensuring that they do not fall victim to fraud. Cash for many reasons, but being the fraud should not be one of them. There are several things that business owners can do quite simply in their business in order to minimize and eliminate certain fraud risks.

One of the first things that business owners can do to help themselves is meeting with their accounting team each month. Part-time CFO says this is something that is important to help keep the lines of communication open between a business owner and their accounting team. This way, the accounting team can get answers to important questions to help them work on the files, as well as allow the business owner to ask their own questions. This open conversation doesnít have to take very long, recommended time is 15 minutes once every month. Open communication is important when working on business finances. Often, small mistakes can be caught, or problems can be found out and easily eliminated early. Some business owners say that the years to find certain financial mistakes, this can be avoided by continuing to have this meeting regularly.

Business owners can also ensure that they have more than one person working on any financial task at a time. The reason for this is a helps keep employees on task and eliminates the possibility of that employee being dishonest. However business owners may not be able to either for the wages or not have enough people to afford having two people on that task, and if thatís the case is part time CFO there are options. One of the first things that they can do is set up and read only access to the bank account says part-time CFO. This way that employee can see all bank activity, but they canít disburse cash. This way one person can work on the financials, but not be able to commit fraud. Another thing that business owners can do is outsource their financial tasks. By doing this, business owners can eliminate fraud risk in their business.

If business owners still have a petty cash fund says part time CFO the first thing that they should do is eliminate that. The reason for that is because not only the petty cash is a fraud risk is also an accounting risk. A debit card itís not so that with them itís so that online purchases canít be made, and that they have daily limit. This way employees can make purchases that they need for the business, that the business owner does not have his entire bank account compromised. Also if a fraudulent charge does appear on that card, a business owner can see it right away, and take any appropriate action To ensure that that employee does not make that mistake again.

There are several risks that businesses face, industry Canada says that 50% of all businesses close the doors to their business within five years, and 29% of those entrepreneurs say that running out of cash was the reason for that says part time CFO. With so many businesses falling victim to running out of money, they should do everything in their power to ensure that running out of money due to fraud is completely eliminated in their business. There are several things that a business owner can do to protect themselves in their business.

Quick and easy way that business owners can minimize and eliminate fraud is by using electronic fund processors on a set schedule. What this does, says part time CFO is changes the number of cash disbursements that are going through a bank account any given day To one disbursement every week or two. This is much easier for a business owner to manage, and much easier for business owner to catch mistakes. If there is a charge that isnít in that weekly disbursements, a business owner can easily see it of the only disbursements coming out of the account hasnít been set up ahead of time.

Another way that businesses can be defrauded is when employees use dummy corporationís to defraud a company when they are working on accounts payable. Part-time CFO says how an employee would do this is they create a fraudulent payment to a corporation that doesnít exist. They cash the check, and when the business owner checks the payment, they say that it will go to what looks like a legitimate company because it has what seems to be legitimate name. Business owners need to ensure that if they see any charges that donít look quite right, they investigate it. Just because it looks legitimate doesnít mean it is. Also they can eliminate this risk by ensuring that two people are working on accounts payable, or that it is outsourced.

Another way that business owners can be defrauded in their own business is only have one employee doing payroll. The most common payroll frauds is when the person doing payroll inflates their own hours or their own wages per hour and earns more money on their paycheck. Part-time CFO says that if done over several months and several years, thousands of dollars could be stolen easily. Business owners can outsourced payroll as well to a third party company.

Another way that employees can defraud a company using payroll, is through payroll remittances says part time CFO. What they do is pay a larger lump-sum to CRA than they should but on their name. At tax time When CRA sees that they paid more in source deductions then they should, they send a refund check back to that employee and not the company. Itís extremely hard to get says part-time CFO because business owners can see the lump-sum payment has been made regularly to CRA, but unless they do the calculations themselves and compare the two amounts they wonít know what happened.