March 15, 2019
Written by Teresa Oliver
What are they and why they matter to your business?
Internal controls are the mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability and prevent fraud. Besides complying with laws and regulations, and preventing employees from stealing assets or committing fraud, internal controls can help improve operational efficiency by improving the accuracy and timeliness of financial reporting.
There are a few internal control violations SMB’s continuously make; like having their office manager handle all their back-end, having little to no documentation, and having no processes and procedures.
The goal of every business owner, not freelancer, should be to scale and grow.
Growth is directly impacted by not having processes and procedures in place because all your time and effort is spent scrambling to get one thing done. There is no clear vision of how to complete a task. Your staff is fully reliant on you to tell them what to do next. That means you are spending more time answering the same questions daily instead of making new sales connections.
Did you know that your employees can not only get their job done but also help you scale your business in the process?
Take vendors for example. How often are your employees face to face with vendors? Probably daily.
Why aren’t they able to submit a new vendor request and have them go through the documented approval process? Why because you haven’t given them that power. Employees are a direct connection and extension of you; they do what you can’t with time you don’t have. But many business owners are reluctant to implement this; afraid of the risk. But if you took the time to get processes and procedures in place, you would be secured in knowing that your business is being run exactly the way you want it.
Here is a little bit of truth that may be hard to swallow. A plumber is a plumber is a plumber, one business is no different from the other except in what they build. Core values, missions, goals and internal processes.
When you decided to open your plumbing, electric, HVAC, landscaping, etc. business, you did so because you felt there was a blank space in the field that was not being served. You set out to solve that problem, but you got bogged down with the day to day of running the business that your initial goal got buried and now you just don’t have the time; you have customers to serve.
The lack of internal controls is two-fold; you work longer and harder for mediocre results and you lack visibility into your financials and business to determine what’s working and how to change what’s not.
Is your accountant/bookkeeper doing this for you? If they are only handling your numbers after the fact so you can file taxes, you, my friend, are in trouble. Check out my blog of the difference between write-up and bookkeeping.
I think it’s time you considered hiring a professional.