By: Ruth King
After working with business owners for the past 42 years I can almost smell when the books are not right. Unfortunately sometimes it is a bookkeeper who is incompetent or outright stealing, other times it is field employees. Either way, it is a sickening feeling and I HATE telling owners, “Someone is embezzling and here’s the proof.”
All leave tell-tale signs. And sadly, most could have been caught quickly (or bookkeepers would never try to embezzle) by owners looking at their bank statements every day on-line.
Then, at the end of the month, print out your monthly statements and review them BEFORE the bank statements are balanced. This sends a strong signal that you are watching the money. It takes less than 5 minutes to look at your bank statements on line every day.
Here’s the one thing you MUST do:
Make sure your months are closed once you print the financial statements and are sure they are accurate. You have to close the books every month and at the end of the year. Since this is the March 2023, 2022 should be finished and accurate. Make sure you close the year.
In the old days, QuickBooks® never had a mechanism to close the months or years. Now the software does. Put a close date in with a password – and you should do this – NOT your bookkeeper!
This keeps you safe so that someone doesn’t put an entry in from years ago so that you’d never catch it. This is one of the easiest ways to steal – you almost never review a financial statement from 3 or 4 years ago. You assume they are correct and done.
Putting in the password also prevents an honest date mistake. Putting an entry in 2022 instead of 2023 and screwing up the 2022 books could easily happen if there is not a password entry.
Don’t be like some owners, once they have a bookkeeper, totally abdicate the responsibility for the financial segment of their business. As long as there is enough cash, they think they are ok. Many times they are not.
You can delegate responsibility for the day-to-day bookkeeping activities. You cannot abdicate the responsibility for reviewing the statements each month. If you take the time (usually less than 30 minutes a month) to review your financial statements, you’ll know if something doesn’t look right or the statements don’t seem right. Start digging and question the entries.
Ask for backup to make sure the values are correct. It’s your business. You have a right to see the backup proving the correct amounts for the entries.
Trust your gut. If you feel something is wrong and things don’t make sense, then something probably is wrong. Most times we don’t want to believe that someone is stealing from us. However, unfortunately it happens to hard working business owners all the time.
Put the password in to QuickBooks® or do the closing procedures for other software. This lessens the chances that embezzlement happens to you!
Ruth King is known globally as the “Profitability Master,” and is a a thought leader in entrepreneurship and business. Her books have been recognized as among the greatest in numerous industries. Learn more about all her business activities here.