When it comes to your business – are your business accounts correct?
If you do the accounts yourself, who checks them?
If you have a bookkeeper, how would you know if they are correct? How much confidence do you have in their accuracy?
How long would it take to discover if there are mistakes?
Who would find the mistakes?
Who would know to look for errors?
Are your accounts correct?
Some recent research has revealed that as many as 92% of businesses have bookkeeping mistakes, issues or other risk factors. Their accounts are not correct
Of course some issues are bigger than others and not every risk will go bad – sometimes it’s just missing data.
Luckily human error is much more common than deliberate fraud.
As a business owner the most important thing to know is how to protect yourself from risk. This is done in several ways and one of them is to make sure your accounts are correct, are accurate and are being completed in line with compliance and legal requirements..
When we rely on the financial data as the basis for decision making in business, it is essential that the data be accurate and reliable.
Today I am going to list a few possible scenarios that can happen in business:
You have a team of 3 or 4 high school and university students age working in your business. One of them has a birthday and to remain complaint with the Award you need to increase their rate of pay
How long would it take you to find out about their birthday and the rate increase?
How long would it take to implement a new rate?
What would happen if they thought you deliberately avoided paying them their new rate and went to Fair Work Australia?
This could happen in pretty much every country in the world – not just here in Australia
On 1 July the rate for superannuation in Australia increased from 9.5% to 10% AND
Superannuation is now payable to every employee – previously there was a $450 per month threshold
Has every business in Australia made the necessary changes?
Did the changes come into affect from 1 July?
If you are not in Australia, are you confident your business fully compliant when it comes to paying superannuation, 401K or other employee payments?
One of your employees has access to the accounting system. They update the payment details to one of your suppliers and put in their account details instead.
How long would it take you to find out?
How would you get the money back?
I’m truly not sharing these to try to frighten you
Trust me, creating fear is never my intention
As a business owner the most important thing to know is how to protect yourself from risk. This is done in several ways and one of them is to make sure your accounts are in order, are accurate and are being completed correctly
Each of these scenarios are from real businesses.
Over the years working as an accountant and in various accounting roles across businesses and doing the work I currently do, I’ve seen how easy it is for things to happen – for mistakes to be made.
As this recent article about says – “the number 1 culprit is human error” – and not deliberate fraud.
What do big companies do?
Large companies employ auditors to check their accounts every year.
Auditors are accountants with special training to forensically work through the accounts and the accounting processes of a company to ensure maximum compliance.
My personal experience:
When I worked in large corporations as an accountant, we would look forward to the auditors visiting as we knew we were doing our jobs well and anted them to confirm this. From time to time they found errors. I don’t recall them ever finding any large errors, although some auditing teams have uncovered major frauds
This one is a bit like scenario 3 above.
One year I was working for an insurance company and an employee changed a clients bank details to his own to process payments. Over the period of a year he had stolen more than A$1Million. He was fired immediately and handed over to the police.
A job I was offered came about because the previous payroll person had stolen pay. This was in the days of cash pay and she had created a system where she was able to steal pay from workers when they were on holidays. I was astounded that she had even through of this system. I was hyper vigilant in that role to never make mistakes. Apart from my belief that the pay people receive requires an extremely high degree of accuracy, I always felt I was under extra scrutiny.
I worked with a financial controller who believed that underneath “everyone is a potential thief”
I certainly don’t agree with him, nor do I believe this – I do believe that anyone can make mistakes that can result in financial loss to a business.
Mistakes make us vulnerable to risk – the risk of relying on inaccurate information, the risk of not complying with the legal requirements are just 2 of the risks business owners face
As a business owner we want to minimise risk
I’m here to help you. If you need to ask any questions about this – please click here and let me know
Chances are none of this is happening in your business … the question is: how would you know ?
My guess is you are here because …..
My guess is that you are here because you are a business owner and what you really want – is to build and grow a successful business – whatever that means to you.
We know that business owners want to feel more confident when it comes to the money side of business.
In just 2 minutes you can take your free personalised Business Financial Health Check to increase your financial safety in business. Are you ready to discover your score?
Having a successful business means making business decisions with reliable information – facts & data as well as your “gut feel.”
… ultimately you want to do what you do best AND have a successful business AND make a difference.
I’m here to help you.
There are 2 ways you can access all my best material:
I regularly run webinars on a range of money related topics:
- Managing Cash Flow so you never run out of money
- Understanding where your money goes – getting those expenses sorted out
- Understanding the Profit First book
- Pricing – getting it right for your studio
- The things you need to know before signing a commercial lease
- How to make more money
- … and many other topics
If you’d like the replay of any of these recent webinars, please email me email@example.com and put “Replay” in the subject and let me know which one you’d like to watch. I’ll send you the link to the replay
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This book is designed to help you build your business – whether you are starting from scratch and creating something new or you have been in business for a couple of years and want to build from your foundations.
The book is your step by step guide to building a business smarter and faster.
“So You Want to Start a Business”
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