What Can Small Business Owners Do To Prevent Fraud And Theft?

Discovering that the employees you trust for many years have been stealing from you is definitely devastating. More often than not, fraud and theft happen when you least expect it. When you have trusted people around you, there are no nagging doubts that you will fall victim to these crimes. As a business owner, being cautious is necessary. Even if you have the most trusted employees, fraud and theft can take place when you do not keep your books in check. Here’s a guide to preventing or reducing employee fraud and theft:

1. Post a code of conduct

Some business owners implement stringent policies so fraudulent activities do not go unchecked or unpunished. For instance, Walmart does not allow employees to accept a cup of coffee or a bottle of beer from a vendor without paying for it. It sends a signal to everyone that the company is not tolerating the illegal behavior. Although not everyone can be as strict as Walmart, posting a clear code of conduct will make employees aware that misbehavior is unacceptable. The code should be given to everyone upon hire. There should also be a written acknowledgement to ensure that everyone agrees and understand it. Being the enforcer of the code, employees are also expecting you to lead by example. What is the point of following strict rules if employees see you use company property or take home merchandise?

2. Create organisational checks and balances

For small business owners, wearing many hats is normal, but multitasking can be dangerous if it involves opening the mail, handling payments and deposits and filing transaction documents. These aspects of the business should not be assigned to one person only. Assigning the same task to the same person only spells trouble. There should be separate people for managing accounts payable and receivable, handling purchasing and more.

3. Have clear policies and procedures

While your bookkeeper takes care of bank and credit card statements most of the time, there should be another person to reconcile bank statements. However, this person should not have the ability to modify or enter transactions in the accounting system. The modification must be restricted as this only opens the door to committing fraud. Confidential financial information must be locked up. Enforce rigorous key control and have a computer-system access. It is common for business owners to retain login information without realising that a departing employee still has it.

4. Observe employees’ behavior

A tell-tale sign that your employee is about to commit or committing theft or fraud is when there are changes in their behavior. Have files been misplaced? Are they giving customers excessive attention? Are they routinely working early or late when no one else is around? While you may dispense it as working extra hours because they love their job, it is also a sign that they do not others to see what they are doing. Even minor blips in your operation is already a red flag.

Once you feel that something does not feel or look right, it is probably not. Take time to investigate as you could be losing a big amount of cash.

What Exactly Is Bookkeeping And Why Is It Important?

We have been told time and again about the importance of bookkeeping, but we always find ourselves procrastinating because it is the job we always have a love-hate relationship with. Bookkeeping is defined as the storing, recording and retrieving of financial transactions of an organisation. It includes tasks such as sales, receipts, payments and purchases. There are several methods involved in bookkeeping, but one thing is for sure, we cannot maintain the finances without bookkeeping.

It helps you manage your cash wisely.

Part of operating your business is to manage customer and supplier accounts. With bookkeeping, you will be able to create a business player, track deposits and monitor payments. You will also know how to make sure that every dollar spent is intended for your business. When you update your books, you will know the financial state of your business. If you have an outstanding bill, income information, unpaid invoices or payroll estimation, you can gain access to these by simply looking at your financial statement.

It helps you make a decision

Thinking about expanding or growing your business? It will not be easy without knowing your financial performance. Banks will not trust you if you have unpaid bills and delinquent accounts. If your records show that you have the ability to pay a loan, the bank will not have any second thoughts of approving your loan application. However, if your records indicate that you are running low on capital, it will be difficult for you to take out a loan.

It protects your small business.

Can you imagine operating your business without hiring a qualified person to take care of your books on a daily basis? Can you be confident that your business is on the right track if no one ensures that your checks will not bounce and you have enough capital for expansion? Will you be able to have a good night’s sleep knowing that you are falling behind your payment schedule as you do not have a bookkeeper to remind you when your payment is due? Not having up-to-date records will run you the risk of losing money. Business growth opportunities are missed and payments will not be made in a timely manner.

Bookkeeping should not be underestimated as it is an integral part of every business regardless of the size. If ever you find yourself ignoring bookkeeping, think about its repercussions. Without bookkeeping, your business will suffer from the lack of financial stability for sure.

How To Save Time In Bookkeeping?

One reason most business owners are tempted to procrastinate when it comes to dealing with bookkeeping is because the task is time-consuming. If you have a very busy day, bookkeeping has to take a backseat. Sometimes, you sacrifice quality to save time. Bookkeeping is essential to ensuring that your business runs smoothly. It does not require extended amount of time by giving your bookkeeping system an overhaul.

1. Automate Payroll System

Manually processing your employees’ paychecks can demand a large chunk of your time. Aside from going through each employee, you will have to print the checks, approve the hours, sign and date the checks and even mail them. Automating your payroll system bypasses these processes. You will only have to focus on one task as the automated payroll system can handle all the tasks. Your job is to approve the payment and once done, the checks will be sent out immediately. Your employees will also get the checks faster.

2. Create An Online Banking Account

Taking several trips to the bank can be tiring. This is why an institution that offers online banking can give you convenience as you no longer have to drive out of your way to deposit checks or withdraw funds. All you have to do is to click a few buttons so you can process your bank transactions. As a result, it will be easier for you to issue refunds and pay vendors. There is no need to worry about falling behind payments schedule. You can also get instant access to debits, credits and account balances.

3. Purchase Reliable Software

Another technique that will keep your bookkeeping to a minimum is to invest in bookkeeping software so you can record your deposits and debits, track your bank transaction and create financial reports. You will no longer have to worry about creating a manual report because the software takes care of your bookkeeping tasks, making sure you have balanced and accurate books. All you need is to dedicate regular time so you can review your report.

4. Create A Separate Account For Your Business Finances

Although most business owners make it a habit to have a separate business account, there are still small business owners who do not know the negative implication of mixing personal with business accounts. It is easy to lose track of your spending habits if you do not have a separate account for your business finances. However, this can also affect your cash flow as it is already too late for you to realise that you failed to monitor your financial activity.

5 Advantages of Online Invoicing Software

Many businesses are preparing for the ongoing digital transformation regardless of the company size. If there is one goal that these businesses are trying to achieve, it is saving time and money while also increasing convenience and productivity. Invoicing is probably one of the most challenging bookkeeping tasks that bring stress to business owners. Chasing after clients and making sure that all bills are paid require multi-tasking and bookkeeping skills. For these regular tasks to be easier, moving to online invoicing is a great decision. Here is why using online invoicing software is advantageous to businesses:

1. It is easy to use.

Filling out a spreadsheet is time-consuming because you need to make sure that all of the essential information is properly entered. Aside from the invoice number and an itemised list of products and services, you will need to review everything to ensure that you are not making any mistakes. You will not only deal with one invoice but multiple invoices. All of these repetitive tasks can be lengthy. Switching to online invoicing software gives you a faster way to deal with your invoices. Since all client information is saved in the cloud, it is easy for you to keep track of your invoices. You will also know the client’s payment method and payment terms. You just need to log into your account and choose the client you want to invoice.

2. It is accessible.

When your files are stored on your computer, access to invoices become limited unless you are in front of your computer. With online invoices, you can access information anywhere and from any device. You will only need to log into your account to find out which clients you have to start billing. You will have the ability to send invoices at your fingertips.

3. It is automated.

Another advantage of online invoicing is its automation. This feature allows you to set up recurring payments for your long-term clients. The automation spares you the headache of reminding your clients about their payment dues. The system will send follow-ups and reminders for past-due invoices. Saving time and money lets you focus on growing or expanding your business.

4. It has high levels of security.

When your computer crashes, you will also be saying goodbye to the most important files because you failed to create a back-up. Online invoices give you peace of mind because the software is extremely secure. It safeguards files against interference and loss.

5. It reduces disputes.

Errors are inevitable when processing involves several steps. Digital invoicing reduces errors and disputes because the total amount to be paid is calculated. It also adds the taxes to ensure that clients are billed correctly. In the event you make a mistake, errors can be corrected in minutes.

How Is Your Company Adapting To Digital Transformation?

Companies around the world have highly anticipated the need for digital transformation as it is taking shape in all aspects of operation. Over the next five years, massive change will be evident. Digital Darwinism’s tight grip is proof that the pressure to transform continues to intensify. However, not all organisations can adapt fast enough.

In a new global survey conducted by Harvard Business Review Analytic Services, with 376 business leaders participating in the survey, almost all of the participants believe that the pressure to transform will only increase day after day. Although the benefits of transformation have been continuously highlighted, many businesses are still having apprehensions and are not 100% open to change. So what keeps these organisations from embracing digital transformation?

According to the survey, only 7% of business leaders are extremely open to change. Most businesses fear that their inability to change fast enough will reduce their chances for survival. About a third of respondents admitted that their organisation has not completely switched to digital technology.

The path to embracing digital transformation is not easy. This is because changes in systems, structures and processes must be taken into consideration. There is also a need for greater investment in culture change and employee support. It is also essential for IT departments to move into leading roles to keep an eye on innovation. There is also a demand for aptitudes, ways of working and new skills. Without a doubt, digital transformation does not offer one-size -fits-all solution. There is no exact timetable as to when an organisation can completely adapt.

These are the steps to preparing your organisation to digital transformation:

Build a change-embracing culture

It is difficult to introduce change to people if they do not know its purpose and benefits. Everyone in your organisation should understand why a change is necessary for your company. Communicating your strategy will also help you prepare for the next big change. Since change is the only thing inevitable in this world, your company should develop a culture that welcomes change.

Create new organisational structure

The survey revealed that 89% of respondents are already taking steps to creating new organisational structures and teams that will support business models and digital operations. The structure needs to be kept flued so it will have the ability to keep up with the dynamic nature of the digital economy.

Explore and learn

Digital innovation should be embraced rather than feared. Digital organisation should take the transformation a step further by exploiting data in different ways. The shift will also make way for organisations to develop faster responses and use assets to the fullest.

Rethink IT

Most legacy IT systems are rigid and slow for digital organisation. Speed is important for digital business. Aside from using new technology, organisations must also take the time to rethink IT’s role. IT should be introduced to new business models, services and products. It is expected for IT people to collaborate closely.

3 Reasons Why Your Business Should Automate Bookkeeping

Automation is one of the biggest trends that made a mark in the bookkeeping industry and with its rapid growth, it is no surprise that many business owners no longer hesitate to grab hold of this new opportunity to keep their financial activities in check. Although human adoption seems to be slower as some businesses are still keeping traditional bookkeeping systems, incorporating automation into your workflow makes a huge difference. Here are three reasons to introduce automation to your bookkeeping system.

1. Save Money

Small business owners try to reduce expenses by handling all of the tasks as much as possible. However, as the company grows, businesses find it difficult to keep up, hence a bookkeeper becomes a need. One bookkeeper cannot handle all the workload and hiring another bookkeeper means spending more money. Automating your workflow will help you standardise your process so you don’t have to worry about your financial status. The information you need from your monthly bank statements will be available for download.

2. Save Time

Reducing repetitive tasks is one of the benefits of automating your bookkeeping system. Imagine how much time you can save from doing away with manual jobs. Automated bookkeeping allows you to generate accurate information that you can access and review at your convenience. However, it is important to remember that automated coding does not necessarily guarantee accuracy as you still need to review monthly transactions. Keep in mind that the purpose of automation is to finish a bookkeeping task the quickest way possible, but checking information to ensure there are no missing transactions is still required.

3. Freedom

The best thing about automated bookkeeping is that you will no longer have to wait for your bookkeeper to provide you information because you can gain access to valuable information using a cloud app. You can even meet with clients monthly to discuss trends and results based on the financial reports you have gathered. As a result, you can set a plan so you can handle cash flow wisely. Keeping the books up to date will never be a problem because it only requires minimal management. With less time and attention required in keeping numbers up to date, you can surely take care of other aspects of your business.

One thing that deters some small business owners from automating bookkeeping is the fear of replacing the bookkeeping work. Since you switch from traditional to modern bookkeeping, you need to learn new processes to appreciate the benefits that automation provides. In the long run, business owners will be able to understand how automation can improve their lives.

4 Reasons Your Small Business Failed To Grow

Most small business owners have big hopes and dreams about growing their business, but only a small fraction of entrepreneurs reach the peak of success. Too many of these businesses fail. It is a sad fact that 60% of small businesses could barely operate within the first three years of starting according to the Australian Bureau of Statistics. Sole proprietors have much lower survival rate than other types of business ownership.

Since there are only a few businesses that flourish, what does it take to survive and thrive? Successful business owners have a set of best practices that they regularly follow: investing in the right business tools, setting goals, planning for business growth and the list goes on.

In cases where business fails to grow, there are top 4 reasons they could not survive:

1. Lack of systems and process

Small businesses have to keep track of every transaction especially if it involves money. Having systems and processes in place ensures products and services are consistently managed. Small business owners are responsible for inventory management, accounts payable, accounts receivable, marketing, payroll and more. Unlike large companies that can already afford to hire people to do these jobs, small businesses have to juggle these tasks at the same time. There are three things that failed small businesses fail to implement: comprehensive bookkeeping process, customer relationship management system and inventory management system.

2. Not having enough funds

It is difficult for business owners to open doors to new customers without sufficient funds. Most businesses fail because they underestimate the amount of cash it takes to maintaing a business. Financing supports inventory purchases, business expansion, startup costs and business improvements. It is imperative that you plan the amount of capital that starting a small business requires. This way you can anticipate other expenses without breaking the bank.

3. Failure to adapt

Even if your small business has savored its initial success, it does not guarantee continued success. When you fail to monitor industry trends and changes, this is when you start falling behind your competitors. It is not uncommon for small business owners to wear many different hats and struggling with managing their time. This is why preparing for the changes becomes takes a backseat. When one area becomes obsolete, all aspects of the business become affected. Small businesses must be prepared to beat the competition by staying ahead of market trends.

4. Not using modern technology

When it comes to marketing your products and services, taking advantage of modern technology is necessary. It is difficult for small businesses to compete with big company because they do not have data-driven marketing. Even a simple task such as creating a website matters when it comes to keeping your product available to prospects. If your business does not have a mobile-friendly website, it will be difficult for you to keep up wth the giants in the business industry.

How To Keep Your Business Safe From Fraud?

If you are the type of business owner who looks over your shoulder, checking whether or not your employees are committing fraud is a sign that you are experiencing embezzlement. It has been found that 28% of small business owners have experienced embezzlement over the years. This is alarming because before fraud can be committed, an employee has to earn a business owner’s trust. Embezzlement is costly as it results in paying penalties and interest on underpaid or unpaid bills and taxes.

There are three factors that can lead to fraud:

-Rationalisation
-Opportunity
-Pressure

Bookkeeping reduces the risk of embezzlement. Also, you need to check reports regularly even if they are delegated to to a bookkeeper. Since you are the business owner, you will be the one who will get assessed interest and penalties especially for missed tax payments. The ATO will chase you for the unpaid taxes.

How to ensure your employees do not commit fraud?

Unfortunately, frauds are discovered when it is too late. The good news is you can limit opportunities for theft with these following steps:

Run a background check on your employees

Anyone can pretend to be a great employee and even fake credentials. Business owners must make it a habit to run a background check before deciding on hiring a bookkeeping. You will never know an employee’s reputation unless you take time to know them.

Delegate tasks and responsibilities

It is difficult to monitor signs of fraud if you delegate responsibilities to one person. Responsibilities must be separated or assigned to different people so you can easily check if there are traces of fraud.

Check transaction history

More often than not, fraud is committed through checks and credit card. These transactions will only be discovered if you check the transaction history. Business owners must take the time to set up automatic payments, review reports, pay bills electronically, avoid signing blank checks and use secure checks.

Monitor payroll, accounts receivable and payable

Aside from monitoring reports, it is also important to monitor accounts receivable, accounts payable and payroll. Accounts receivable refer to open invoices while accounts payable refers to unpaid bills. Payroll must also be monitored such as the deductions, commissions, wages, overtime and timesheets.

It takes time and effort to ensure fraud is kept at bay, but it is even more expensive to let fraud go unnoticed. Aside from penalties and interest, your company may also run the risk of going out of business because of cash flow problems.

The Difference Cloud Bookkeeping And Traditional Methods

Cloud computing is one of the business trends that continue to thrive. All kinds of businesses utilise cloud not only to connect with customers but also to make business practices more efficient. In a study conducted by Computerworld, 42% of IT decision makers increased spending on Cloud computing in 2015.

Bookkeeping is one of the aspects of your business that will benefit from cloud solutions. You can manage your finances easily and access data anywhere.

Cloud Bookkeeping Vs Traditional Bookkeeping

Although cloud technology is a buzzword, only a few will be able to understand what it really does to your business. Cloud stores data and other essential financial information, making it available to business owners and employees so long as there is access to the Internet. Unlike traditional bookkeeping software that requires one dedicated hard drive to store or record financial data, cloud bookkeeping software is Internet-based. With that said, it does not affect your existing storage.

When it comes to costs, cloud software is more affordable because it does not require additional software or hardware to run it. In the event your computer crashes, your data will remain secure because cloud-based bookkeeping programs will back up your data automatically. You can also use the cloud-based solutions on many different platforms, something that traditional bookkeeping software cannot offer.

When can you maximise the benefits of cloud-based software?

As they say, cloud-based solutions are not for everyone. When you are making a buying decision, it is essential to assess your business needs before you invest in cloud bookkeeping software.

  • If your company has a limited budget, investing in cloud bookkeeping software is the way to go because it costs less over time.
  • Business owners who have remote workers can also take advantage of the flexibility of cloud-based solutions because it can be accessed anytime and anywhere.
  • For small companies that are concerned about security, many cloud-based programs can offer increased levels of security to keep your data protected against threats.

The fear of embracing cloud technology

For business owners who are not familiar with on-premise financial system such as Cloud ERP, letting go of traditional bookkeeping methods is a difficult decision to make. Some concerns being raised include availability, security, ownership and location of financial data, software updates and getting used to a new financial system.

However, cloud does not give organizations a hard time adapting to change. Even smaller firms can use cloud bookkeeping technology without undergoing extensive training. It also offers a good number of benefits such as scalability and flexibility. You can even gain better control of your finances because information is available in real time.

Startup Failure: 4 Reasons Your Small Business Struggle To Survive

Yesterday you were filled with enthusiasm, excited about the idea of running your business, but that excitement was abruptly replaced by disappointment as your boat suddenly sinks to the bottom. What have you done to make your business take a nose dive? What should have been done to ensure business survival?

It is disheartening to discover that 8 out of 10 small business owners fail within the first 18 months according to a study conducted by Bloomberg. At an alarming rate of 80%, you cannot help but ask: What did I do or What did I not do?

Another study also discovered that only 50 percent of small businesses barely make it to the five-year mark and only one-third survive the tenth year of running their business.

According to Forbes, each month, more than 500,000 businesses are started. Unfortunately, many of them fail.

Here’s why:

1. Poor Management

Putting up your own business is not a decision you make on the spur of the moment. It takes years of planning and analysing. Everyone can say they have what it takes to be a business owner, but once they are confronted by problems with cash flow, taxes and payroll, they choose flight over fight.

Business management encompasses a lot of things. You can be good at selling, but hey, there are still other business aspects you should not overlook such as hiring and managing employees, purchasing, production and more. Did you make the cut?

When you start your own business, educate yourself on skills you lack. Also, do not forget about your employees. Without them, you will not be able to accomplish your goals.

Employee engagement should not be ignored. Be mindful of the leaders you hire to manage your employees. Do they encourage productivity or are they the reason for employees’ lack of motivation?

2. No Strategic Planning

A business plan is critical to all businesses. Even if you are a seasoned entrepreneur, you are not going to be immune to problems. A business plan will help you analyse workforce needs, competition, budget, promotional activities and other business components. If you decide to expand your business, bankers will also request a business plan from you before you can secure additional capital.

3. Starting A Business For The Wrong Reasons

What is your primary reason for starting your own business? Is it making a lot of money? Pursuing your passion? Spending more time with your family? These are benefits you reap from being a business owner, but you might have failed to realise that it will take years of hard work before you can savor success. When starting your own business, you need to have the right reasons: love and passion for what you will be doing, drive and determination and ability to face failures.

4. Insufficient Operating Funds

You may have the passion and skill to become a successful business owner, but without sufficient capital, launching your business will be a big challenge. Although it takes a year or two for your business to finally take off, you should also take the costs of staying in business into consideration.

Self-made millionaires have a positive mindset, determination and drive to succeed. They also view mistakes as an opportunity to learn and grow. There is no secret sauce to becoming a successful business owner. If you think that failure is never an option, you will do whatever it takes to succeed.