Small business owners are usually wearing a lot of different hats. With limited resources, you might juggle many roles on a given day. You might be depositing cheques one minute and reviewing a sales contract the next minute.
When focusing on the growth of your business, it can be easy to forget to ensure that there are checks and balances to safeguard your business. Internal controls can help you protect your business, regardless of size. Good internal controls can help ensure the accuracy and reliability of financial information, protect your assets, and reduce fraud risks. By taking a few simple steps, small business owners can put in place systems and procedures that will help to keep their businesses running smoothly.
Here are some of our best tips to help ensure that you protect your business from these risks.
Segregate tasks and responsibilities
One of the most critical internal controls for small businesses is segregating responsibilities. Assigning separate roles and responsibilities to different employees is a good way for companies to reduce risk. For example, the person who reviews invoices should not be the same person who approves payments. By separating these responsibilities, you can help to prevent errors and fraud in your business.
Establish clear lines of communication
In a small business, it is crucial to establish clear lines of communication. Having a system in place for employees to report concerns about possible fraud or wrongdoing is vital. You may consider setting up an anonymous tip line or advocating for a culture where employees feel comfortable speaking up to help to create a well-functioning workplace.
Implement physical controls
Physical controls help to protect your assets and prevent fraud. For example, you might consider installing security cameras or requiring employees to wear ID badges. You might also want to limit access to certain areas of your business, such as your accounting office or data centre.
Regular Reviews and Reconciliations
Taking the time to review your financials and banking records can help you protect your business.
Spot-checking inventory, reviewing cash balances, or reviewing payments before sending them out are just a few examples of procedures to help your business. These reviews can help you protect your business from honest mistakes and any fraud that might occur.
Protect your digital environment
In today’s business world, it is vital to protect your digital environment. Good controls can range from having strong passwords to other security measures to prevent hackers from gaining access to your systems. In addition, backing up your data regularly is vital to avoid losing important information.
Ensuring only the necessary personnel have access to bank accounts, your business records, and other vital files and documentation are critical ways to protect your business.
Establish procedures for handling cash
If your business deals with cash, it’s essential to have strict procedures for handling it. For example, you might require that all cash receipts be deposited into the bank daily. You might also want to limit the amount of cash kept on hand at your business.
Communicate with employees
Ensure your employees know about the internal control procedures in place. Explain why these procedures exist and how they can help to safeguard your business. Training on internal controls can also be a helpful way to ensure that your employees are up to date on the latest policies and procedures.
Internal controls such as the above suggestions can help protect your business proactively.
When you implement internal controls, you can safeguard your business from fraud and other risks. Business owners can implement systems and procedures to protect their businesses from fraud and other unethical behaviour by taking a few steps. Therefore, implementing internal controls is integral to being a successful small business owner.
Contact GGW LLP in Oakville for Expert Small Business and Accounting Advice
Our skilled accounting professionals can help you find ways to safeguard your small business. At Glenn Graydon Wright LLP, our financial advisors can help you audit your internal controls or help you establish processes to protect your business. In addition, we can provide you with recommendations on implementing and streamlining your accounting function to work best for your business. To learn more about how Glenn Graydon Wright LLP can provide you with the best accounting expertise, call us at 905-845-6633 or connect with us online to set up an initial consultation.