7 Ways Small Businesses Bleed Money

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Laura S. Goodman, CPA from FGMK, and Adam Radulovic, CEO of XL.net, work with small businesses throughout the Chicago-land area. Some of the ways they have seen small businesses taken advantage of, schemed and embezzled while working as a CPA and in IT respectively are shocking.

1. Mistaking a scammer for a trusted business partner

When a business partner or vendor calls or emails you a new way to transfer money, use a two-party authorization for the new wire location and amounts over a set threshold. It’s even a good idea to use technology to voice-verify that the person you’re speaking to is the person you think you’re speaking to.

2. Employees resisting full profitability

There are whole seminars dedicated to the practice of inspiring your employees to work harder for the company and not leave any money figuratively lying on the table. Maintaining productivity with your workforce is difficult, especially during this pandemic when so many industries have transitioned to remote or hybrid work. Using compensation formulas, behavior incentives and engagement multipliers, you can incentivize profitability with employees.

3. Choosing cheap or untrustworthy vendors

Choosing a vendor is an important thing, so don’t take it lightly. Rely on your relationships and recommendations, checking trusted review sites to help assess overall value.

You may be able to find a company that does what you want for cheaper, but at some point cheapness starts to cost you more in time and performance.

4. Not managing deposits

If you are a small business, it’s likely that you have several small accounts sending you checks to be managed in-house. The possibility of a check getting lost in the mail or slipping behind a desk is more likely than we might like to admit. Making sure you have a set process accounting for your invoices and payments ensures that nothing gets lost.

You can get a lockbox at your bank which turns your bank into your accounts receivable. The bank will deposit your checks directly and send you a report at the end of each month.

Remote deposit capture is another way to deposit.

5. Getting caught up in litigations

If you work with a client or a vendor that is mixed up in any kind of litigation and the parties involved see or think you have available funds, the suing party can go after in their claim. You could get wrapped up in something that doesn’t concern you. So having a low balance or a zero balance in a checking account can shield your cash line.

6. Bad checks

Keeping separate bank accounts for operation, deposits and payroll is also beneficial in protecting your business from someone getting access to your routing numbers and writing bad checks as you.

You can also implement positive pay which will only allow your bank to pay pre-approved companies on your behalf.

7. Internal fraud

If you are a small company, you probably have a few one-person departments and that might even be your finance department, the person dealing with invoices, deposits and payroll.

To lessen the likelihood of anything nefarious happening internally, you can implement these simple things:

  • Separate responsibilities among different people.
  • Enhance approval process, having things go through several people.
  • Make vacations mandatory so tasks eventually have to be passed around and nothing can stay hidden.
  • Cross-train so multiple people in the company understand how things are done.
  • Surprise-test for quality control.

For business solution to help you company, contact XL.net today

Strategic IT is all about aligning your company’s technology with its business goals. From productivity-boosting software implementations to a user-focused help desk, IT can affect many different areas of a business. In addition to efficiency and user satisfaction, it can also play a significant role in meeting sales goals, budgeting, market research and many other areas, which is why it’s so important to have a purposeful, wide-reaching strategy for your IT.

Whether you need an IT strategy or your existing one isn’t cutting it, XL.net can help. We offer strategic IT services throughout Chicago, IL and the surrounding area.

Contact us to start your better strategy today.

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