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Small Business Finance Blog

Want to gain full control over your firm’s finances but aren’t sure where to start? You’re not alone and you’ve come to the right place. Read on and reach out if we can lend a hand.

Internal Controls for Small Business: An Introduction

Tight financial controls are a must for every small business and they don’t need to be overly complex or cumbersome to establish and maintain. To get started, here are three essential areas your internal controls must address, along with examples of the underlying controls.

1. Secure confidential information and files
Bank statements, loan applications, employee records and other papers containing financial and/or personal information should be locked in filing cabinets or offices. Access to accounting data on the computer should be password-protected. Screens on computers with access to sensitive data should be locked when they are not in use and never left unattended for prying eyes to see.

2. Establish fraud prevention checks and balances
There should be a separation of duties within your finance department. The person who doles out petty cash should not be the same person who reconciles the petty cash account, for instance. The person who makes deposits should not also be recording payments in your accounting system.

3. Create a consistent process to catch errors
Reconciling the bank, cash, and credit card accounts each month is one simple way to catch mistakes. Another is to print out the profit and loss report each month and study it for any inconsistencies.

It’s OK to start small, but be sure to work toward establishing a comprehensive set of internal controls. Read our article on controls for a more in depth look. 
 

NEED HELP?

Driven Insights serves as an outsourced finance department for small businesses. Our bookkeepers are charged with much more than simply "doing the books." We leverage the data we gather to produce game-changing insights for our clients. We also establish, document and manage our clients’ internal controls.

Email or call 888-631-1124 to find out how we can help you maintain tighter internal controls and reach your goals, all while sleeping better at night.

Dave Robinson

Written by Dave Robinson

Driven Insights founder, author of "Competitive Advantage through Financial Management", writes about informing business decisions.

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