Do you regularly monitor your company’s cash accounts? Being aware of where your cash is going can help prevent theft or improper expenditures, which are among the chief sources of loss for small companies.
What can you do to reduce the risk of losses? The textbook answer is to implement “internal controls.” Internal controls are standard procedures for assuring the integrity of your financial processes. For example, segregation of duties, such as having more than one person involved in preparing, signing, and reconciling checks, is an internal control
Utilizing internal controls and other cash monitoring strategies can minimize the chances of your business losing money unnecessarily. Here are a few suggestions for safeguarding your company’s cash:
- Make sure all invoices have an approval signature before being paid.
- Personally verify that new vendors exist.
- Require sign-off of employee expense reports by a higher-level employee.
- Don’t permit the person who prepares a company check to sign that check.
- Consider requiring two signatures on checks.
- Maintain a list of void checks and compare them to your bank statement.
- Use a bank stamp to endorse checks immediately upon receipt.
- Personally open bank statements and other mailings from the bank.
- Review and reconcile your bank statement regularly.
- Monitor online access to your business account.
