“This week’s Ask Manny question comes from Taylor.”

Question:

I’m worried about employees stealing money from me. I run a predominantly cash business. Money comes in and out of a cash register multiple times a day that my employees have access to. On top of that, I have an office manager that has access to my bank account so she can pay all my bills. While I inherently trust everyone, I have this nagging worry in my mind that someone may be stealing. How can I better protect myself? 

 

Answer:

You want to safeguard your assets… especially your cash. Technology can help in a lot of ways to keep our cash secure. But ironically, it can also give you a false sense of security which can allow others to take advantage and swoop in. And for all the technology that’s out there, cash is still cash and remains relatively easy to steal.

But don’t worry – we have solutions!

Let’s turn to a concept called “internal controls”. An internal control is a safety measure that is put into place to help safeguard against the “misappropriation of an asset” (in other words, theft). CFOs study this concept and are often charged with building and monitoring internal controls within a business. Why? Because an asset is monetary value to the business… and money is the domain of the CFO. It also involves risk management, which is also the domain of the CFO for the same reason (risk = potential unexpected loss of money).

What internal controls can be established? That largely depends on the business size and risk areas. For a larger business that has a few employees, simply segregating duties amongst the team can be extremely helpful. For example, one person is responsible for approving bills for payment, but another person initiates the payments from the bank account. This ensures that at least two people are looking at the money leaving the business, which helps to decrease fraud. For cash registers, you can have one person ringing up orders and taking the cash, but have another person periodically balance the cash register to catch any discrepancies.

Technology can also help tremendously. And if you are a smaller business then it can really be the go-to solution. For example, we recommend that businesses use a third-party bill payment system like Bill.com or Melio to initiate payments. This ensures that all bills are approved by someone before being paid. And it allows payments to happen without someone having to log into your bank account. It’s a nice separation that proves extremely useful.

These are just a few examples of internal controls that your CFO can help you set up.

Finally, this answer would not be complete without a quick mention about insurance. There are policies available that can help cover your loss in the event of a theft. For example, here are CFO Services Group, we have a “Crime Insurance Policy” that protects against theft of our own funds and the funds of our clients. It’s a low-cost way to really help me sleep better at night. Again, your CFO can discuss risk mitigation options like this on with your insurance broker to help ensure that your risk areas are adequately covered.

Bottom line: Work with your CFO to identify any loopholes in your internal control and risk systems. And then close them immediately! Then enjoy the peace of mind that comes as you continue to grow your business without worrying about your hard-earned assets being taken away.

Need help in setting up internal controls in your business? We would love to assist! Reach out to us at info@cfoservicesgroup.com and let’s have a conversation.

And for more information on the insurance policies you need to keep your business safe, check out our free video in our library.

 

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