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When every penny counts, getting control over your small business’s finances is a primary concern. Small companies must run a tight ship, so financial processes should be efficient, secure, and controlled to keep the company afloat. Big companies have entire departments to ensure business finances stay on course, but what about smaller companies? Luckily, by taking advantage of the available and affordable solutions, you can take the steps that provide better control and protection over your financial processes.
Step 1. Strong Financial Policies
Now that your business is growing, you should review your financial procedures to make sure you’ve built a solid foundation for your business to continue to thrive. Pay particular attention to your current strategy for financial approvals since this is an area where many small businesses make the mistake of putting too many money responsibilities in the hands of too few employees.
It’s critical your Accounts Payable (AP) procedures enable you to approve, pay and sync bill payments, and your Accounts Receivable (AR) procedures allow you to send invoices and get paid faster. Unfortunately, today, many small businesses still use predominantly manual and paper-based AP & AR procedures. This often comes with an absence of approval workflows and policies.
No matter the size of your staff, your company should clearly outline which employees have permission to handle specific financial documents so you can avoid mistakes and misunderstandings. It may be one person or several. For account payable approvals, your policy should be very clear on who is authorized to approve payments for the company, including the approval of expenses on credit and debit cards. You should decide who in the company can approve and authorize new vendors and access vendor information. Also, any changes to a checking or savings account should go through the correct approval channels. Like payables, receivables should never be assigned to just one person. Make sure your procedures for taking in money have a system of checks and balances.
Small businesses need a solution where payment and vendor approval routes can be set at the highest level, so there is no chance for missed steps (helping you avoid costly errors) in the workflow process. Finance heads can create advanced rules in seconds, ensuring transactions are authorized and approved by the correct person or team and are consistent with business goals and objectives.
Bill.com payment and vendor approval routes enable you to do all this.
Step 2. Checks and Balances
The right AP/AR platform helps reduce a serious small business challenge—fraud. Fraud can come from internal or external sources. To protect your business from internal fraud, use a system of checks and balances to ensure no one employee has control over all parts of a financial transaction. Separate tasks where fraud is more likely to occur, such as receiving payments and recording payments, then be sure to reconcile accounts on a regular schedule. Simply put: the same person should not be able to both approve and pay a bill.
The correct user roles and permissions allow employees to participate in the business’s AP and AR processes without having access to the company bank account or accounting system.
The right AP platform offers clearly defined roles with various levels of accessibility and control around:
- Approving bills
- Authorizing payments
- Scheduling payments
- Managing user access
These permissions align with specific roles such as platform “Administrator”, “Accountant”, “Clerk”, “Approver”, “Payer”, and “Auditor.” Once the roles are defined, and permissions are set, it becomes easy to access an audit trail. Now a business owner can quickly uncover who paid what, when, and for how much.
Keep an Audit Trail
Even if there’s a slight chance you will be audited, you should always be prepared—no matter the size of your small business is. One easy way to do that is to use an all-in-one platform for AR and AP automation. This gives auditors full visibility into your company’s payments and receivables, saving you time and reducing risk for your business. Auditors want to know if something was approved prior to payment and if you followed documented processes. Bill.com keeps an audit trail of all approvals, changes, and payments so auditors can get what they need without having to follow a paper trail or follow-up with individuals at your company.
Your company is too important to forego taking these crucial steps to ensure financial control and security are in place to protect your money at the highest level possible. You can start implementing more robust financial controls today.
In partnership with Bill.com where SMBs can gain better financial control over their businesses, reduce costly errors, and lessen the risk of fraud. Their affordable solutions provide better control and protection over your financial processes.
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This article, "Are Your Financial Policies Strong Enough to Protect Your Small Business?" was first published on Small Business Trends