If you’ve noticed that your books don’t look right and money seems to have magically disappeared, it’s time to take action. While there could be a very reasonable explanation for it, there could be some other aspects you’re not thinking of. Let’s take a look at these 6 common reasons why money might be going missing from your business.
By Team Savant
Image: Growtika
Cybersecurity Issues
Having cybersecurity issues can lead to devastating losses for your business. If money is going missing, it’s a good idea to check here first. Make sure you’re safeguarding your business by ensuring all systems and accounts have strong passwords and encryption in place. You should also consider taking out cybersecurity insurance to ensure your company is safe should the worst happen. While that’s another expense you’d rather not be paying for, it leaves you and your business covered.
Accounting Errors
Humans make mistakes, so another place to check would be your accounting team. Making sure you’re on top of your finances is essential for the success of your business. Take the time to regularly review your financial information and update anything that’s out of date to avoid any expensive mistakes. Not having accurate and up to date records can quickly add up to catastrophic losses in your business.
Uncollected Debts
Another area to check is for any unpaid invoices. Keeping tabs on outstanding payments is essential to prevent your debts being sent to a debt collection company. Dealing with outstanding debts can be very time consuming, so if you’re finding it difficult to keep on top of things, consider delegating this work to one of your accountants, or even an assistant to ensure the debts get paid. You might notice that once the debts have been repaid, money on the books is back to normal.
Employee Theft
You certainly don’t want to go in all guns blazing here, because as a manager you should trust the people that work for you. However, it’s important not to rule it out altogether, as employee theft does happen from time to time. Ensuring you have an effective accounting system in place will ensure that no money accidentally falls into an employee's hands. Having only trusted members of staff handling the cashing up at the end of the day is another way of preventing employee theft.
Unauthorised Purchases
Unauthorised purchases can happen from time to time due to miscommunication. However if this is something that’s happening regularly, it’s time to take action. Have your accountants regularly check employee credit cards for any sign of spending for personal gain. Make sure there’s someone in place to approve any spending before it happens. Catching the problem sooner rather than later will prevent any further losses.
Fraud
Finally, while humans do make genuine mistakes from time to time, there could be fraudulent activities going on. If you do suspect there might be fraudulent activity, consider using a forensic accountant to go through your accounts and books to figure out what’s going on. If fraud is going on behind your back, it’s a good time to lawyer up.