It’s the thing every company boss dreads: Your business seems to operating well but somewhere and somehow the finances don’t seem to be stacking up. It’s unusual for things like this to happen suddenly – it’s more likely that things haven’t been right for a while and maybe you haven’t quite been on top of your finances.
So what do you need to look out for if your financial situation seems to be heading south?
Investigating financial irregularities
If you think something isn’t adding up in your company’s finances, you need to take some time to investigate the possible causes. It’s not a good idea to immediately point a finger and blame an individual or department. If you’re wrong, you could not only destroy trust but also be held liable for wrongful accusations with the potential for damages to be awarded if a case goes to court.
Don’t make judgments until you know the facts – then you’ll be in a strong position to sort out the problems.
Examine the reasons for losses
Strangely enough, the answer to sorting out your company’s finances can be relatively straightforward. These are some of the factors to consider:
- Look into deals that have been done in the past. It may be that even with the best of intentions, a deal was struck that meant the company was paying over the odds for products. This could have been done with the hope that better terms might follow in future. In any event, if finances are not organised properly, this could lead not only to more money being paid out, but additional pressure being put on staff whose productivity may drop. This helps no one and is definitely worth looking into.
- Make sure your finance department is being managed well. It can be easy for a busy department to let things slide or put things off. Take invoicing as an example – without regular invoices for products and services that are chased up, you lack cash flow. Reliable invoicing can help ensure payments to your company are made on time. If the finance department is having problems, then an organisation such as invoicehome.com can make a real difference in how you do your invoicing.
- Fraud from a staff member is always a concern, and even though you’d probably rather not consider this as a possibility, it does happen. If you do suspect that someone has their fingers in the till and is skimming off money that doesn’t belong to them, you need to act. In the worst-case scenario, you may have to bring in the police – especially if you have strong suspicions after interviewing a suspect on the premises. At that stage, you may be able to get information on a staff member’s personal finances to see if there is anything that doesn’t seem right. It can be a messy business, but you shouldn’t discount the possibility. Trust is a two-way street and although you don’t want to be in a position where you distrust an employee, it’s sensible to be aware of the potential for someone doing wrong and damaging your finances.
- Sometimes you need a fresh set of eyes on your financial situation. Running the business and managing employees takes a lot of time and energy, and many times the financial side of control gets parked. This is the ideal time to consider bringing in a professional accountant to look more deeply into your finances. You may have dozens or hundreds of transactions happening every day, and it can be difficult at times to keep track of everything. It’s not just the money coming in and going out in terms of what you are buying and selling – you have to make sure payroll is organised well and that you are accounting for (and paying) VAT where it’s relevant. This means that a fresh professional eye on what’s going on can quickly identify what’s working for your finances and what’s not.
Never ignore financial problems
You run your business well because you want to be successful. You want to employ people and you want a company that people look at and appreciate – not simply because of good products and services delivered, but because you have an organisation rooted in your community. Put your financial wellbeing at the top of your company’s agenda and address any perceived or actual problems by taking action immediately.