What Is a Safeguard
A safeguard is a countermeasure to protect a business against a specific attack, threat, or infringement of an agreement. Safeguards are definitely needed in today’s society because there are all types of illegal practices happening within the business world. These legal practices can come from a business’s employees or from doing business with an outside vendor. Safeguards also can protect a company if they have a contract with another company and if the company they are under contract with breaks the contract or agreement they can be held liable through the court of law.
What Are Financial Safeguards
The purpose of a financial safeguard is to provide a business optimal risk management protections. The company is protected against fraud, theft, and embezzlement. The business owner should take the proper steps to protect their business by not letting an accountant or business manager have complete control over their business. The first step is the business owner should have his or her business bank statement mailed to their home so they can assess the bank statement before handing it over to their bookkeeper. The business owner should also perform monthly bank reconciliation with someone other than the person who usually makes the monthly deposits. You should limit the access of accounts receivable payments to just a few individuals and have a separate accounts receivable P.O box. All of the following processes that were listed are labeled as cash control safeguards. These cash control safeguards help to prevent an employee from having the ability to steal cash from the business.
Business owners should also be in charge of collections or have a designated trusted manager in charge of collections. If there is any collections the business owner or designated manager should approve these collections in writing. An invoice log should always be maintained. The business owner or designated manager should view collections account receivable reports on a routine basis. The business owner or designated manager should routinely view their client list for potential fake customers on a routine basis as well.
Issue With Chargebacks
What is a chargeback? a chargeback is a return of funds that is initiated by an issuing bank to repay a customer who was either overcharged or falsely charged in error or on purpose by a business. Chargebacks can also occur business-to-business as well. A chargeback usually occurs between business-to-business when a distributor has been overcharged by a supplier and the distributor is trying to recover the money that they lost in the transaction. Businesses should try to avoid any chargebacks if possible. In some instances mistakes do happen but if the chargebacks keep occurring it can look as if the company has fraudulent practices.
Importance Of Controlling Your Accounts Payable
Business owners must be intentional when it comes to controlling their accounts payable. The business owner or designated manager should approve all vendor invoices personally. Business and corporate credit cards should have restricted access. A written policy should be in place to determine what expenses are and are not reimbursable. When an employee does use a company credit card they should sign an expense report to ensure that the charges are true and accurate. Business owners or a designated manager should routinely view the master vendor list to ensure there are not any false vendors on the list.
There are currently plenty of assets that are available for business owners or corporations to use to protect their business. The main thing that the business owners have to keep in mind is that you have to continuously be a part of your business. Or have a designated business manager that they can trust at all times to do the right thing the right way. Do not allow every employee to have access to revenue without having the proper tracking system in place.