Leverage Your Resources To Protect Your Business And Your Wealth
Small Businesses and Investors are at High Risk for Negative Actions "Negative actions" include both intentional actions and unintentional actions
. Intentional negative actions include embezzlement, fraud, stealing, etc. Unintentional negative actions include things like careless mistakes and errors. Both can be very harmful to a business or investment.
Small businesses (businesses with only a few owners) and investors are more likely to fall victim to "negative actions" than larger organizations.
Here are a few reasons as to why this is:
The bookkeeping is often handled entirely by one person with little or no review. The owner or investor is stretched thin, wearing many different hats. Little time or focus is placed on putting checks and balances in place.
What this all boils down to is resources. Smaller organizations do not have the extensive resources that larger organizations do. This means that smaller organizations need to be better at leveraging the resources they do have.
Putting just a few simple systems in place can dramatically improve protection against negative actions. Systems are a tremendous form of leverage and can help leverage other resources.
Here are a few tips on how to leverage your resources to protect your business and your wealth.
Know Who You Are Paying
With access to just about everything online, it has become fast and inexpensive to do background checks. Leverage this technology!
You may think this is an obvious step, but I find it is a resource that is not fully leveraged.
Think about the people you pay. Most businesses and investors have employees and / or vendors.
Have you done background checks on all of your employees? What about all of your vendors?
This is where a system can help. The system can be as simple as this:
Every time you hire an employee or vendor, do a background check. Create a checklist of the specific checks you will do - criminal, credit, governing boards, etc.
Follow this system every time.
Know Your Expenses
Have a system to review and approve expenses before they are incurred. This minimizes the opportunity for an expense to go unnoticed.
For example, when you sign a check, you should be able to reference it back to the approval. You should never sign a check without support!
It's fairly common to have someone else prepare checks for you to sign - usually a bookkeeper or office manager. The stack of checks to sign should always include the approval for the expense.
Before you sign a check, you want to see what it is you are paying. Do you recognize the vendor? Is the expenditure something you have already approved? Does the name on the check match the name on the support? Do the amounts agree?
Leverage this system to other payment forms, like credit cards.
Know Your Account Activity
Reconcile your bank account every month.
I'm always surprised at how many people don't do this every month. Set up a reminder to do this every month. Simply having a reminder and doing the reconciliation can be your system.
What are you looking for in your reconciliation? Of course, you want to make sure the account reconciles - this means the activity on the statement matches the activity in your records. Your also want to use this time to look for anything unusual and to review the checks that have cleared.
Leverage this reconciliation system to other accounts, like investment accounts, credit cards and loans.
Most, if not all, of the this can be done online. Many banks and financial institutions have expanded their online tools to help small organizations protect their money. Leverage these resources to help you protect your business and your wealth.
This Applies to All Businesses and Investors
Many small businesses and investors fall into the dangerous thinking that they are too small to worry about this. This is the very reason why smaller organizations are more vulnerable to negative actions.
by: Tom Wheelwright
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