Many smaller businesses have technically correct books and still cannot say whether last month was profitable, because the accounts were prepared for filing rather than for management. The figures arrive too late to decide anything with.
The other problem is control. Where the same person receives the money, records it and approves payments, the risk goes undetected, and the loss usually surfaces only years later.
The work is to design something that fits the number of people the business actually has, rather than importing a large company's system wholesale.
What we do
- Set the chart of accounts and document flow to match how the business earns and spends.
- Define approval, receipt and payment procedures, with duties separated so they do not sit with one person.
- Produce monthly management reporting on performance and cash, in a form that can be read.
- Forecast cash for businesses with long collection cycles.
- Prepare the information banks require for credit facilities.
- Review the existing system and report in writing on what should change.
The minimum separation of duties
- Whoever approves a payment should not be the person requesting it.
- Whoever keeps the books should not hold cash or have payment authority over the bank account.
- Bank reconciliations should be done by someone other than the person who posted the entries.
- Related-party transactions should be approved at board level.
A business with few staff cannot separate everything. Where it cannot, management review substitutes — for example, the owner reading the bank statement personally every month.
This page is general information, not advice for your business. What suits depends on its size and nature.