One challenge for many small business owners is understanding the financial reporting aspect of the business. It is important to have a comprehensive picture of where your money is going and who's handling it. The accounting procedures you put in place will be key to this, but you still have to be sure that everything is accurate. To do this, you need to have controls in place with your accountants to ensure that everything is being done according to plan. Here are some tips to help you protect your company's finances.
Your cash handling is one of the biggest areas of vulnerability inside your company. For that reason, the cash controls should be a priority. You need to implement some regulations to help you keep tabs on all of the cash flow in the accounts. First, create a list of the employees who will be granted access to the cash for petty cash distributions, cash deposits and similar cash handling needs You'll also want to implement a solid schedule for making those cash deposits so that it's easier to identify variances. If a deposit isn't made on schedule, it will stand out.
Cash should also be kept secure all the time. Make sure that there are procedures in place for every bit of received cash to be logged, identified and marked by employees so that you know everyone who has touched it from the time it comes in the door. That way, there's never any question about who has accessed the cash. In addition, you should require multiple signatures any time cash is distributed to anyone, including for payroll processing and paying outstanding accounts.
Division of Labor
There should always be some disconnect between the staff handling your accounting tasks and those managing the cash. This prevents any potential overlap where things could slip through the cracks or something could get processed without the proper authorizations.
In addition, there should be separation among the cash-handling employees. You should have separate employees taking the cash and making the night deposits. That way, there are two different people counting that cash, which helps to keep everyone honest. In addition, you should appoint a third employee to sign off on orders before they are placed.
Plan Routine Accounting Audits
All of the accounting records should be assessed quarterly for accuracy. Make sure you have an outside accountant or CPA available to do this so that you can be sure that it is objective. By doing it quarterly, you're able to spot potential problems early, preventing things from getting out of hand before they become apparent.
These tips will help you to ensure that your company's finances are secure and you always know where things stand. Talk with a local small business accounting firm like Bliss & Skeen CPAs for more advice today.