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Canberra Bookkeeping & Business News

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Signs Of Business Fraud And Ways To Prevent Them

Small business owners consider embezzlement prevention as a challenge because fraudulent transactions are difficult to detect. Missing cash balances cannot be easily noticed until the amount has been recorded. Even blank cheques and fake invoices are proof that something fishy is going on, and both small and big businesses can fall victim to fraud. It can even go as far as inventing fake vendors on invoices so cheques can be issued to themselves. This is by far the most common way an employees steals from the company.

The transaction raises a red flag once you discover that the bank statement is in somebody else's name. Unfortunately, it is already too late to put a lid on the transaction as it has already been made.

There is a fine line that separates incompetence from fraud. This is why it is hard to conclude that the transaction that took place was indeed fraudulent unless it has been done habitually. For instance incorrect entries may appear as though the bookkeeper has been changing information, but at the end of the day you will realise that the bookkeeper just did not know the correct process. It is essential to know the telltale signs before jumping into conclusion.

Signs of fraud

If a bookkeeper is having trouble matching accounts payable and accounts receivable to your balance sheet, you may need to review the information on the report. You will be given many reasons why the report has not yet been updated. In fact, a bookkeeper may tell you that the reason for not providing an updated balance sheet is because of faulty bookkeeping software. This leads to running a report manually. When reports are generated manually, the process will take longer than usual and the information can be altered. Bookkeepers will also blame the software for failing to reconcile a bank account. These excuses should be a cause for alarm and you need to act on it by regularly monitoring business transactions.

Preventing Fraud

Although you cannot easily detect or prevent fraud, there are ways you can prevent them and one of which is by giving bookkeepers deadline for running a report. Reports must be ready after month-end and you should review them monthly.

It is also necessary to assign a different person for enter the bills and paying the bills. You can monitor where the money is being spent if you ask employees to attach cheques to the invoices. You must also sign your own cheques. Physical inventory also helps you check if there are suspicious transaction taking place. Your employees have to know you are monitoring every transaction.

Why Hire A Bookkeeping Service?

Small business owners often consider hiring a bookkeeper costly, but they realise the importance of a bookkeeping service when the business’ financial aspect is in chaos. A savvy business owner will consider hiring a bookkeeper to focus on other front-end activities. While this may not seem practical at first, a business owner will find a bookkeeper useful when everything is placed in proper financial perspective.

Benefits of hiring a bookkeeping service

•    It saves time.
When it comes to data entry, accuracy is important because the financial statement will serve as a basis for bookkeepers to know the direction the business is heading. If figures are not clear, you will have trouble ensuring that your records are accurate and clean. It is important that you keep records of the book. When a bookkeeping service is available to take care of these tasks, not only will business owners prioritise front-end activities such as maintaining a positive company image, generating sales and strengthening relationships with vendors there is also a greater peace of mind knowing records are in good hands.

•    Professional help is provided.
Relying your bookkeeping tasks on professionals will give you an assurance that important tasks are well taken care of. As a result, you will no longer have to worry about filing tax returns because you are confident that your records have been handled by a qualified bookkeeper. You can also be sure that you obtain a certain level of professionalism and expertise.

•    It saves money.
Every cent counts for a small business owner. Unlike established companies, cash flow is limited for a small business. One of the ways that small business owners do to save money is to cut corners even if the financial aspect of the business is greatly affected. However, when you cut labor costs, you may also be compromising on the quality of your daily task. If you have a full-time bookkeeper, you will no longer have to think about bookkeeping since there is a qualified individual who can efficiently do the job.

•    More focus on the task at hand.
Although many businesses tend to multi-task, there are still some drawbacks in multitasking that small business owners need to take into consideration. Since the business owners cannot give 100% of their attention to the client, financial and administrative matters are often overlooked. When professionals take care of bookkeeping tasks, financial matters are handled efficiently. Small business owners no longer have to worry about missing out on important details of bookkeeping.

•    Things get done professionally.
DIY bookkeeping may not give you the best results you are looking for. Although your intention is to save money for your expansion, you may not be able to achieve this goal if there are irregularities in your financial activity. A bookkeeper will see to it that things are done correctly.

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