Penny Webster, Macclesfield Client Director
If I asked a client the question “How are you protecting your business?” they would probably reply with something about various insurances. But, there are other ways that they can protect their business and how we can help them do this. We don’t just support our clients with their accounts, tax and payroll needs, we look at the whole business and where we can offer additional advice to help them protect against fraud and ultimately thrive and achieve their goals.
A few areas that we discuss with our clients so they can consider their current position and what they need to do to help protect their business going forward.
- Have up to date information
If you know your figures it is easier to see if something is wrong.
Has trade dropped off, making cash tight? If you have a cashflow forecast you can manage fluctuations in your business. Cash is still king and not managing it correctly is the reason many businesses struggle.
Would you know if your gross profit margin has reduced and if this is right? It could be down to the mix of sales but maybe due to fictious payments or invoices being included.
Why are payroll costs more? Is it the increase in NI or is there now a fake employee?
If your figures are out of date, it is far harder to see what is happening.
We can offer advice on streamlining your bookkeeping and integration of different software like Xero. This means there is far less room for human error and fraud and you have access to up-to-date figures.
We can also prepare management accounts so you have accurate, real-time information and figures which can help prepare forecasts, giving an idea of what your expected results are. Then if the figures differ, they can be investigated.
- Make sure you have sufficient controls in place
In relation to fraud we would advise clients to have controls in place.
This will obviously vary from business to business as different size companies require different controls.
You should consider how much responsibility you give to your employees and people involved in the business. Unfortunately, just because someone has worked for you for a long time it doesn’t mean that they won’t steal from you.
For instance, who authorises orders and invoices? Can staff order items for themselves or could they include fictious invoices and pay themselves? Does anyone check them?
Do you actually check the payment details back to invoices when authorising payments? Can your staff pay any amount without authorisation?
Speaking to a business recently, they mentioned that a member of their staff could send £250k from the bank without anyone else authorising it. I suggested they get some authority levels in place ASAP.
How often is stock counted, are there always errors when it is? Do the amounts total in the way you expect? Do you investigate when there is a discrepancy?
Where possible segregate duties. Can you have different people posting the purchase invoices, setting up the payments and authorising the payments? If you can split the roles there is less opportunity for fraud unless there is collusion between staff.
I know that this can be difficult especially in small businesses and that it isn’t always possible to check everything all the time so perhaps try to spot check items occasionally.
- It is your responsibility
Do you know the difference between an audit and account preparation?. Don’t expect your accountant to find fraud. That isn’t the role of an accountant, they compile your figures so that you comply with accounts and tax laws.
An audit is a much more in-depth review usually reserved for larger companies due to the cost.
If you have a good accountant they can advise you on the correct tax and accounting processes so that you don’t end up with costly problems if HMRC open an enquiry.
Tax investigation insurance is something we recommend. It covers your accountants fees in the event of an enquiry. Enquiries can be expensive even if you have done nothing wrong.
A good accountant can also advise you on the most tax efficient way forward so you are not overpaying tax. Have you considered the Dividend v salary options? Are you paying too much tax?
IHT changes happening next year will affect many businesses and individuals. Are you happy that you know what your business is worth and how these changes will affect you?
If you have any questions around business protection, Cashflow forecasts, Tax investigation insurance or any other points raised in this article, please do get in touch.
