Fraud and Theft Guard #2: As a business coach, I’ve learned It’s important that you always insist that two different people are involved in the depositing and withdrawing of money within your business.
Years ago I was blessed to be able to hire my father to work with me (which was a big goal of mine growing up). He was and is the most honest human I have ever been around. This man does not have the capacity to tell a lie, yet we all have the capacity to screw up and mess up our numbers. If I was in his position working as the company’s bookkeeper, I would occasionally mess up the numbers as well. That is why you need to create systems where one person calculates the numbers and one person verifies the numbers any time you are depositing or withdrawing money within your business.
As an example, the person who opens your business mail should go to the effort of listing all the checks received on a spreadsheet file of some kind. Then this person should prepare these checks for depositing. After the spreadsheet has been created and the checks are prepared for depositing, the second person must double-check their math to make sure that they did not make an intentional or unintentional mistake. As a business coach I have learned that by implementing this system, you will almost completely remove the temptation for fraud that many people struggle with. You will also create a situation where two people would have to actually be involved to rob your business. This creates a powerful accountability system that will protect the financial health of your business.
“For the 61 percent who admit to wasting 30 minutes to an hour, the lost productivity may not seem like a big deal. But for a small business owner, even 30 minutes each day adds up to 2.5 hours a week and 130 hours each year.”
-Jayson Demers, “How Much Time Do Your Employees Waste at Work Each Day?” Inc. Magazine
Fraud and Theft Guard #3: Create a non-erasable financial history for your business
It’s very important that you create a non-erasable financial history for your business so that committed criminal minds cannot take advantage of you. As a quick note, I want to dedicate the intensity of this portion of the book to all of the people who have screwed me over the years. Without exaggeration, I have been robbed of approximately $500,000 to this point in my career. I’ve dealt with the guy who falsified invoices to get paid higher commissions. I’ve dealt with the man who used my business card to fill up his boat with gas during my landscaping days. I’ve dealt with countless employees who have lied about and exaggerated their hours over the years. I’ve issued countless refunds and have even had to settle to prevent lawsuits with dozens of customers over the years because an employee of mine chose to be negligent and screw over the customer. My friend, this is unfortunately the way life is.
“According to a survey by psychotherapist and consultant Dr. Brad Blanton, 93% of respondents out of forty thousand Americans admitted to lying regularly and habitually in the workplace.”
Fraud and Theft Guard #4 – You must become passionate about numbering your accounts payable invoices and keeping a separate log of who actually has each invoice series.
This is important because when someone attempts to take advantage of you by creating fraudulent invoices from a fictitious company that your company just happens to pay, you can nail them…and I have! (Yay me.)
Fraud and Theft Guard #5 – Keep your company checks in a locked and secure location
Recently I dealt with a low-quality human who actually attempted to write himself checks by stealing some of my corporate checks that he found on my desk when I got up and went to the restroom. I had discovered that this guy was lying about the hours that he was working on his search engine optimization tasks, so I was watching him like a hawk when it was discovered that he had attempted to write himself two paychecks during that week.
Fraud and Theft Guard #6 – Verify that your financial software is set up with individual log-ins for various team members who need access to that information
Whenever you set up your financial software for your business, you must go through the process of creating different log-ins for the various members of your team who need access to the critical financial information. Thankfully, I have yet to be robbed by somebody who was logging into QuickBooks to cover their tracks so that no one could detect what they were doing, but as a business coach, I have worked with a client who had this happened. Basically, to save money on the number of licenses he needed to purchase, this client created only one QuickBooks login and the man he hired to do the books for his business quickly discovered this. He began to set up new vendors within the system that he would pay on occasion. Later it was discovered that he was the “owner” of these eight to ten different companies that were getting paid a little here and a little there each month. As of the writing of this book, both QuickBooks and Peachtree have functionality set up to allow you to create individual logins for the various members of your team who need access to your accounting information.
“A global survey by Workforce Management company Kronos found that as many as 58% of employees call in sick on days they want to watch or attend a sporting event…This very simple kind of twisting the truth can cost organizations 8.7% of payroll each year, according to the study.”
Fraud and Theft Guard #7 – Actively show that you are engaged and involved in the weekly accounting process
When the criminal mind notices that you don’t notice certain things or that you are too trusting of certain people, it goes to work. I have learned as a business coach that as a business owner, you need to show that you are engaged in the accounting process and that you weekly review the financial documents associated with your company. Yes, you must delegate to members of your team when you can. But know you cannot trust people. You can put your faith in God if that is how you choose to believe, but you cannot put your faith in people or you will be taken advantage of. To stay actively engaged in your business, as a business coach, I recommend that you take the following action steps on a weekly basis:
1. Schedule a weekly accounting meeting with your accounting team in which you question and highlight any purchases that seem unusual to you.
2. Listen to the members of your team, but listen to your inner voice and conscience if something seems out of the ordinary or weird. If your internal alarms are going off, then you are probably correct.
3. If something seems outside of the boundaries of your normal weekly numbers, strongly question it and demand answers with proofs.
4. Look for people who are extremely defensive when asked questions that enforce accountability, transparency, and verification that your numbers are correct. Most people who lie consistently will be offended at the thought of you holding them accountable or questioning their actions.
“In an updated regulatory filing released Wednesday, the social media company (Facebook) said that 8.7 percent of its 955 million monthly active users worldwide are actually duplicate or false accounts.”