- Saves time
Irrespective of the number of employees in a business, payroll processing takes time to complete, as well as attention to detail to ensure accuracy. Pay periods are recurring events, meaning that the owner or payroll processor is required to dedicate time to payroll processing. This takes time away from business-critical tasks that would support the growth of the business. By outsourcing, the business owner can focus his/her time on activities that drive the business forward and would generally need to contact the outsourcing company once a month only, saving still more time.
- Segregate accounting duties
In simple terms, if one employee handles cash and performs accounting functions that enables that same employee to process accounting entries to conceal any movement of cash, you have a problem with lack of segregation. An employee involved in the handling of cash should never have the function or capability to record accounting entries pertaining to that cash. If you cannot segregate the functions, consider a virtual CFO relationship with an accounting firm or outsourcing at least some of your accounting functions.
- Know your team
Ensure that you perform background and credit checks on all employees before you hire them. Remember that employees inclined to commit fraud will go out of their way to gain trust from colleagues and management by working late, etc, which translates to you as the business owner more easily dropping your guard since you are potentially mistaking their “loyalty” when they are paving the way for their mischief. Ensure that you enforce staff taking leave as this usually exposes fraud when the employee in question is away.
- Exercise tight internal controls
Even small businesses need to create and maintain internal controls that would deter or detect fraud. Ensure that you restrict access to financial account information, that access to inventory is controlled, expense reimbursements endure multi-person signoff and, as the business owner, that you perform a review of your books of account – and ask questions!
- Review business banking accounts
If you as the business owner, regularly log into your online banking accounts to review statement activity, this will serve as a significant deterrent to would-be fraudsters. Be on the lookout for beneficiaries that you do not recognize, frequent payments to the same beneficiaries and payments on unusual dates.
Regularly audit areas of your business that work with cash, refunds, inventory and accounting and do not disclose to your employees your timelines of when you will be performing these audits. If you are able to make self-audits a part of your weekly or monthly routine, without your team knowing when you will audit next and what you will review, fear of detection will discourage any mischief on their part.
- Staff training
Create a culture of zero tolerance of fraud in your business and train your team to know how to recognize fraudulent behaviour and what to do in the event that they discover or suspect such conduct.
- Protection of credit card information
Small business owners tend to fall into the trap of mingling their personal and business funds. At all times, keep them separate or alternatively ensure that your bookkeeping function maintains detailed reconciliations of business vs personal expenditures. Company credit card details should be known to only the most senior of management, with password management protocols in place. If your business relies on online purchases for business expenses or consumables, ensure that your preferred online retailers offer secure payment portals and observe website security protocols.
- Know your customers and suppliers
As one would perform background checks on new employees, operate the same protocols with new customers or suppliers to ensure you know exactly who you are doing business with. Knowing how to mine the internet is an invaluable skill in this exercise, as are local credit bureaux and credit information providers.
- Take every case seriously
If you have taken the trouble to set up anti-fraud procedures and protocols, it is vital that you follow them and take every non-conformance seriously. Your zero-tolerance policy relies on your vigilance in following and embedding those protocols.
- Call the experts
If after doing all of the above, you are still experiencing recurring fraud or shrinkage in your business, it’s time for the forensic experts. Accountants make for great investigators and financial detectives, and have the talent to unearth that which you cannot see.
Our business consulting team is passionate about helping you to keep your business honest and prevent fraud. If you require our input or advice, reach out to us at https://www.mmsgroup.co.za/contact/.
Many businesses in South Africa are finding themselves faced with liquidity pressures as a result of Covid-19 and the lockdown. The inability to trade for several months has translated...
Business success is facilitated by order. As an entrepreneur, starting a business is like walking a tightrope. How can you be a technician of success as a business owner? The business...
Social media may sound frivolous to a professional businessperson, but the marketing potential of social media platforms is unrivalled in today’s digitally driven world. The number of...
Let us assist you with:
If you found this information helpful, contact us now for help with your specific needs