“Always Take Your Purse to Communion”
More on TRUST but VERIFY (Read Steve Cesare’s blog from Tuesday!)
When I started working with privately owned businesses (financial services-insurance industry) I was surprised at some of the bad experiences those businesses had overcome that came from within the company. One of the most common was how often the bookkeeper or office manager had stolen money from the company. This usually occurred over a long period of time, in increasingly greater amounts until some event caused it to come to light. When I began working with the Harvesters it didn’t take long before green industry business owners started sharing these same problems.
It’s heartbreaking, really. It happens to large companies; it happens to small companies. It happens a lot more than you think. Imagine you started a business with a few key employees. You grew the business, trusted the people, and treated them well over the years. You remain loyal to those who stuck with you when you started the business. One day you ask for a particular kind of report or someone asks some questions about bank accounts that don’t track, and the problem is exposed. At that point, the person(s) usually confesses, but sometimes you must hire an investigator to track what happened and the total damage.
So how do you avoid it? You remove the opportunity. For example, when I go to church I bring my purse. When I go to the altar to receive Communion, I always bring my purse with me. You’d think I’d be safe at church to leave my purse in the pew as I step a few yards away. Maybe. But why leave that temptation there for some poor soul? I would much rather take my purse to communion and know that I have removed the temptation.
Similarly, you can remove the opportunity for someone to take advantage of your trusting nature. It’s not that you don’t trust your team, it’s that you want to be confident that there is someone with experience and knowledge from outside your normal team* (not an in-house person, not your regular bookkeeping firm, not your CPA – although you could have a person from that firm other than your normal contact, if they do that type of work.). It’s like a “mini audit.” Hopefully, nothing will be found other than some improvement opportunities to streamline processes!
Most importantly, your trusted employees will know that this is part of your quality control program and won’t be tempted!
Would you like to discuss what you should be tracking in your financial results? Do you have a solid understanding of how revenue and expenses are recognized in your company? Thinking about how your company can maximize its value? We’d be happy to have a confidential complimentary conversation with you about these or any other exit/sales/buying issues.
You can reach me via email: [email protected] or on my cell phone a: 224-688-8838.
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* You’d think having your spouse handle the books would help, and it does, but there is only so much someone will find unless they are looking for problems. I wouldn’t put my spouse in that position. If something bad is there, you are better off having an outsider who won’t be with you on an ongoing basis deal with it. My recommendation is to have a qualified third party perform a review of your general ledger, bank accounts and financial system to look for issues.