Once upon a time, we had a client who trusted his office manager implicitly. She shielded him from all the day to day bothersome details of his business by responding to emails on his behalf, taking care of all of his voice mails, managing employee records, and paying his bills by using pre-signed checks taken from the safe. He was happy, feeling that his office was under control so that he could focus on more important things.
Until one day when we alerted him that deposits that should have made it to the bank, didn’t.
Until one day when he discovered that not only were his company’s utility bills being paid through ACH drafts from the business bank account, but also his office manager’s electric, gas and cable bills.
Until one day when he learned that there were “ghost” employees on his payroll.
How many people have your bank account number?
How many people can access your email account?
How many people can sign your name?
Here are some best practices for every business owner:
1. Institute internal controls. Don’t let the same person pay your bills AND reconcile your bank account. Don’t let the same person write checks AND sign them. Require a copy of the invoice before signing checks, and take the time to verify payee names and amounts. More information about internal controls can be found by clicking here.
2. Keep your passwords secure. You may think it’s efficient to give someone else the password to your email and voice mail accounts – but do you really want them masquerading as you? And what important information are you missing because someone else filters it before it gets to you?
3. Maintain administrator rights. Whether it’s software applications or your bank account, don’t give someone else the same level of access that you have.
4. Write as few checks as possible. Checks have your bank account and routing number printed for all to see – everything a thief needs to set up ACH drafts from your account or to create their own set of checks with your information. Institute direct deposit and pay cards for your payroll, set up ACH drafts for recurring bills, and guard your check stock. For more information about preventing payroll fraud, click here.
Don’t let efficiency get in the way of best practices.