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Financial Controls and Best Practices for Your Business

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Financial Controls and Best Practices for Your Business

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Business ControlLike many small-business owners, you started out as a jack-of-all-trades. Whatever needed to be done to keep the doors open in those hectic first months, you did it: sales, marketing, IT, maintenance, administration and bookkeeping.

As your business grew, you added employees, vendors, an attorney on retainer. Now you couldn't do everything yourself if you wanted to. To support the continued growth of your business, you need to implement some basic financial controls and best practices. How do you go about it effectively?

Glad you asked.

First, Figure Out Where You Are
This is actually a good time of year to take your business' pulse. You need to put your tax records in order, and you should be compiling a forecast for the new year. That's not a burden — it's an opportunity. Good, thorough bookkeeping records aren't just an indication of how you've performed in the past year, but are a blueprint for growth — if you know how to interpret them.

Take Control of Your Controls
In the old days, you did the books yourself using simple spreadsheets. Now your office manager mostly does the books, and the system has become so complex that you no longer fully understand it at a glance.

Though it's helpful to take bookkeeping off your task list, you can't remove yourself from the process. Lack of oversight enables fraud. Any time you give an employee access to your company's financial instruments, such as a checking account, you're inviting temptation — particularly if that employee is the sole person with access. That's why segregation of duties is probably the most important of all internal controls.

More and more small businesses are turning to outsourced bookkeeping services and back-office support to provide these controls. Outsourcing introduces third-party oversight as well as sophisticated software tools that, along with helping to keep you from losing money, can reveal new pathways for making even more money. Did you know that, with your permission, your bookkeeping vendor can obtain read-only access to your statements in order to facilitate their work?

Create Transparency Through Technology
Transferring your bookkeeping to the cloud, and going paperless in the process, instantly eliminates much of the potential for fraud. Remember, not all financial losses are a result of malfeasance. Losses can occur because of simple mistakes or the failure to recognize and react quickly enough to volatility in your market.

Technology can assist with these issues as well. Instead of waiting for your part-time or in-house bookkeeper to belatedly reveal you had a supply chain problem, for example, you can get an alert right away by using software that can track your key performance indicators (KPIs) in real time. Even better, the software can be configured to display the information that matters most to you, in a manner that's easiest for you to understand.

As you plan your new fiscal year, make sure financial controls and best practices are part of your business strategy. From segregation of duties to taking advantage of the cloud, efficiency software products and KPIs, the tips covered here will help you set up your business to scale successfully with growth.
John Gleason

Author:

John Gleason

John Gleason is Managing Director of Supporting Strategies | North Shore, MetroWest, Central & Western MA. John’s team helps Massachusetts businesses pursue success by providing professional bookkeeping and controller services.

Legal and Tax Disclaimer

This website is created by Supporting Strategies to provide general bookkeeping and accounting information only. Supporting Strategies does not provide tax, legal or accounting advice, and the information contained herein is not intended to do so. As such, the information provided should not be used as a substitute for consultation with professional tax, legal, and accounting advisors, and you should consult with a tax, legal and accounting professional before engaging in any transaction.