Ensure no one person has control over all parts of any financial transaction.

• Require all purchases, payroll, and bill payments to be authorised by a designated person.
• Separate handling funds (receipt and deposit) from record keeping (recording transactions and reconciling accounts).
• Separate purchasing tasks from payables tasks.
• Ensure that the same person isn’t authorised to both write and sign a cheque.
• When opening mail stamp cheques “Not Transferrable” immediately.
• Require supervisors to approve employees’ time sheets before payroll is processed.
• If your team is so small that you can’t separate duties, require an independent check of work being done, for example, by outsourcing accounts and payroll preparation.
• Require accounting and payroll employees to take holidays.

Reconcile bank accounts every month.

• Require the reconciliation to be completed by an independent person who doesn’t have cheque signing abilities.
• Examine bank statements and cancelled cheques to make sure cheques are not issued out of sequence.
• Initial and date the bank statements or reconciliation report to document that a review and reconciliation was performed and file the bank statements and reconciliations.

Restrict use of credit cards and verify all charges made to credit cards or accounts to ensure they were business-related.

• Limit the number of business credit cards and users.
• Establish policy that credit cards are for business use only; prohibit use of cards for personal purposes with subsequent reimbursement.
• Set account limits with credit card companies or vendors.
• Require employees to submit itemised, original receipts for all purchases.
• Examine credit card statements and corresponding receipts each month, independently, to determine whether charges are appropriate and related to business.

Provide Directors oversight of financials.

• Monitor your financial records on a regular basis, comparing actual to budgeted revenues and expenses.
• Use independent bookkeepers to process accounts and payroll, and audit accounts prepared by employees.

Have written policies for the following:

• Cash handling
• attendance and leave
• expense and travel reimbursements
• use of business assets
• purchasing guidelines
• petty cash
• conflicts of interest

Ensure that business assets such as vehicles, mobile phones, equipment, and other resources are used only for official business.

• Examine expense reports, credit card charges, and telephone bills periodically to determine whether charges are appropriate and business related.
• Maintain vehicle logs, listing the dates, times, mileage or odometer readings, purpose of the trip, and name of the employee using the vehicle.
• Periodically review the logs to determine whether usage is appropriate and business related.
• Maintain an equipment list and periodically complete an equipment inventory.

Protect petty cash.

• Limit access. Keep funds in a locked box or drawer and restrict the number of employees who have access to the key.
• Require receipts for all petty cash with the date, amount received, purpose or use for the funds, and name of the employee receiving the funds listed on the receipt.
• Reconcile the petty cash fund before replenishing it.
• Limit the petty cash amount to a total that will require replenishment at least monthly.

Protect cheques.

• Prohibit writing cheques payable to cash.
• Deface and retain cancelled cheques.
• Store blank cheques in a locked drawer or cabinet, and limit access to the cheque book.
• Ensure that blank cheques are not pre-signed.
• Require that cheques are to be signed only when all required information is entered on them and the documents to support them (invoices, approval) are attached.
• Require two signatures on cheques above a specified limit.
• Mark invoices “Paid” with the cheque number when cheques are issued.

Protect cash and cheques received.

• Ensure that all cash and cheques received are promptly recorded and deposited – ideally the same day.
• Issue receipts for cash, using pre-numbered receipt book.
• Conduct unannounced cash counts.
• Reconcile cash receipts daily with appropriate documentation (point of sale, cash reports, receipt books etc.)

Avoid conflicts of interest.

• Have a written conflict of interest and code of ethics policy and update it annually.
• Require that related party transactions be disclosed and be approved by the Owner/Directors/Board.
• Require competitive bidding for all major purchases and contracts.
• Discourage the hiring of relatives and business transactions with Board members, employees or their family and friends.

Click here for payroll or accounts help

There are four main areas to consider:

1. Separation of duties
2. Authorisation to approve payment
3. Security of assets (e.g. stock)
4. Review and reconciliation

So here are some best practice tips for each area:

Separation of duties

Ensure that payment documents are processed correctly by having different people involved in the payment process. This principle is called separation of duties.

Best practice is to have different people:

• Approve purchases
• Receive ordered materials
• Approve invoices for payment
• Reconcile financial records
• Review financial records

Potential consequences if duties are not separated:

• Erroneous or fraudulent invoices approved for payment
• Unauthorised payments made to non-existent vendors

Outsourcing part of your accounts and payroll processing seperates these duties from internal employees.

Authorisation and approval

Ensure that you authorise, review, and approve invoices for payment based on signed agreements, contract terms, and purchase orders.

Best practices:

• Review and update authorised signatories periodically.
• Obtain pre-approval for any consultant agreements.
• Verify receipt of goods and services to the contract, purchase order and invoice information.
• Reconcile ledgers for accuracy of recorded transactions.
• Monitor that invoices are paid in a timely manner.

Potential consequences if accountability does not exist:

• Unauthorised, unnecessary, or fraudulent payments or purchases
• Unauthorised work performed by vendors
• Loss of supplier discounts due to late payments
• Improper charges to incorrect accounts
• Conflict of interest when paying an employee for outside work

Security of assets

Once you receive your goods purchased, secure them in a safe location. To account for resources, periodically count your inventory and compare the results with amounts shown in operational, warehouse, point of sale and accounting records.

Best practices:

• Secure goods received in a restricted area.
• Restrict inventory access to appropriate staff only.
• Lock up goods and materials, and provide key or combination to as few people as possible.
• Keep inventory records and periodically calculate opening and closing inventory amounts.

Potential consequences if your assets have not been secured:

• Theft of goods
• Inventory shortages / stock losses
• Additional costs incurred for replacement of goods

Review and reconciliation

Your reconciliations confirm that you’re paying for approved purchases and are being billed correctly. Perform regular bank account and ledger reconciliations to catch improper charges and validate transactions.

Best practices:

• Review vendor invoices for accuracy by comparing charges to purchase orders.
• Verify that the goods and services purchased have been received.
• Perform daily, weekly or monthly bank account reconciliations.
• Perform monthly reconciliations of operating ledgers to assure accuracy and timeliness of expenses.
• Perform monthly review of profit and loss (month, year to date, compared with previous 11 months, actual compared to budget) and balance sheet.

Potential consequences if review and reconciliation is not performed:

• Improper charges made to your business
• Costs charged to incorrect accounts
• Payments made for items or services not provided
• Penalties for not paying for goods or services received on time

Click here for help with reconciliation of accounts and report production.

While the economy is slowly recovering, business owners must adapt to the changing business climate in which harnessing technology, working virtually and doing more with less are the norms.

As a business owner, you’ve probably seen drastic cuts to your budget during 2008 – 2010. In 2011, your budget is likely to be flat. The drastic cuts of the past three years are thankfully over, but your budget is not exactly skyrocketing.

You want to spend most of your time – and limited budget – on driving growth. Essentially, you’re looking for ways to deliver more value and innovate more – without spending more.

The way to do that is of course to drive down costs – especially the labour costs involved in infrastructure, freeing up as much of the budget as possible to support business goals.

You want to pinpoint the exact areas where you can cut without hurting business goals. In 2011, doing more with less means making drastic changes to the way offices and accounts departments are run. It means taking those budgets and making the most out of them, not allowing any waste whatsoever. Tight, efficient budgets require utilisation of the most cost effective solutions.

In 2011, do more with less by optimizing your office and accounts staff, driving down costs by utilising virtual office support and freeing money for the tasks that will help your company – and your bank balance – grow.

Click here to find out about virtual office support

When we think of outsourcing, call centres in far flung places like the Philippines typically spring to mind. However, increasing numbers of New Zealand businesses are taking advantage of local ‘Kiwi’ outsourced business service providers and cutting costs as a result. Yes – outsourcing can save you money, but that’s not the only reason to do it.

1. Benefits you could achieve by outsourcing:

• Control capital costs. Outsourcing converts fixed costs into variable costs and releases capital for investment into revenue-producing activities elsewhere in your business.
• Increase efficiency. Doing everything in-house creates higher administration, marketing, and distribution expenses that you have to pass on to your customers. An outside provider’s economy of scale can give your business a competitive advantage.
• Reduce labour costs. Having in-house staff for non-billable activities is expensive, and employees don’t always live up to your expectations. Hiring, training and supporting them takes precious money and time. Outsourcing lets you focus your human resources where you need them most.
• Start new projects quickly. You may need outside help to free up time to undertake new projects that don’t warrant another full-time employee. Outsourcing gives cost effective access to resources and expertise that can grow with your business.
• Focus on your core business. Every business has limited resources, and every owner or manager has limited time. Outsourcing can give your business back time to focus on what serves your customers, generates income and grows your business.
• Level the playing field. Most New Zealand SME’s simply can’t afford the big in-house teams of larger companies. Outsourcing helps SME’s look and feel “big” by giving them access to the resources, technology and expertise that large companies enjoy.
• Reduce risk. Every business involves risk. Employing one person in-house for business processing is a bigger risk than outsourcing to a professional credible company with a team of experts and separation of duties. Markets, competition, legislation, financial conditions, and technology all change quickly and outsourcing will spread some of your business risk to your outsource providers.

2. Knowing what to outsource:

You probably already outsource parts of your business without even thinking about it. Who does your marketing, graphic design, printing, website design, HR consulting or manages your IT? Outsource the work you don’t need a real, live, warm-body, under-foot, on-site employee for:

• Non-billable activities that aren’t central to generating profits or competitive success.
• Routine jobs that waste valuable time and energy.
• Tasks that recur in cycles.
• Jobs that are less expensive to have someone else do rather than doing them in-house.
• Activities that can be done in-house, but drain resources that could be better used elsewhere.
• Jobs requiring specialised skills that don’t warrant employing a full or part time person.
• Activities that people don’t enjoy doing.

Outsourcing is a viable option for everything from payroll, accounting and bookkeeping, office administration and paperwork, phone answering, manufacturing and delivery to customer service, employee recruitment and training, property management and computer services.

3. How much money could you save by outsourcing?

The average savings from outsourcing internationally are up to 40%, with small to mid-sized businesses making even bigger savings. We’ve surveyed many New Zealand business owners and asked them – how much does it cost to sit one full time staff member down in your office per year? Over 60% think it’s $40,000.00 or less. And they’re horrified that it actually costs $60,000 to $95,000 per year!

Click here to find out how much you could save by outsourcing.

4. Choosing an outsourcing partner.

The most important aspects to consider are reputation, experience, size and communication. Do they have a team of highly trained, articulate, and well educated employees? How will your data be protected and backed up? Choose a professional nationwide company that has a record of delivering outstanding services that are cost effective and confidential. Click here for Smarts outsourced office services

5. Focus on the value, not the cost.

New Zealand is a DIY nation. Many business owners think they can save money by doing it themselves. Outsourcing costs money. But so does time, and mistakes. Less time spent, quicker turn around, and higher quality results are worth spending money on.

Outsourcing may well prove to be the least expensive and most efficient option for your business – check it out.

Article published in StartUp – Upgrade your business Magazine January 2011 Edition

The massive fraud could have brought the company to its knees.

Saw this article today and thought it may be of interest to New Zealand business owners. This shows the risk when the same person is involved in the operational and bookkeeping side of the business.   Risk can grow and in this case cost the business $250k.  

Managing the risk

We’re not saying that is the case in your business, but it shows how important separation of duties is.   This is a good example of one of the reasons why outsourcing your bookkeeping is a good idea – risk management.   The other advantage is accuracy of information.

For the full article… Read More

Could you be a Victim of Theft or Fraud?

Click here for the seven signs of bookkeeping fraud

Need bookkeeping and accounting help? Click here

Because there have been no GST changes for over 20 years, the GST rate is hard-coded into many software programs. They simply haven’t been designed to allow for changes to GST.

Updating systems can be a costly exercise. What settings will have to be changed? Who will make the changes? And will you need new hardware to handle it?

Each situation is different, but the costs for your business could be purchasing and installing an upgrade, hiring a software developer or even buying a whole new accounting system.

Upgrades are expensive, plus they’re a real hassle to install.

You may be wondering what this means to you.

Well, the news is all good. Smart and Xero can take care of all the heavy lifting for you while you get on with more important things. This is a great example of the power of outsourced accounting and online software – you get to enjoy all the benefits of someone doing the work for you alongside automagical GST changes in your accounting system without having to install any updates.

So sit back, relax and ask us how we’ll make the increase in GST a wee bit less painful. Click here to enquire

What is Crowd Sourcing?

Crowd sourcing is the act of taking a job traditionally performed by an employee and outsourcing it to an undefined group of people. “There would be no buildings costs, no pensions and no healthcare costs, making huge savings,” said Tim Ringo, head of IBM Human Capital Management.

Trend Watching

“I keep wondering how long it will be before the accounting profession is hit hard by outsourcing. So far, it has hardly been touched. Yet, accounting is a conceptually easy target. I believe the only thing holding back outsourcing accounting jobs is fear that data (account numbers, credit card numbers, proprietary results, etc) falls in the wrong hands,” says Mike “Mish” Shedlock. Click here to read the full article

Your privacy is really important to us.

Smart takes security of your information very seriously and takes measures to ensure that your important business information is never compromised. That it is kept strictly confidential, and backed-up off-site every day – click here to find out how

Enquire about Smart’s cost effective, confidential, professional outsourced accounting services. Click here to get a quote

No one gets ahead by maintaining the status quo.

In more prosperous times it’s easy to stick with the status quo, to keep doing things the way you’ve always done them and not worry too much about costs.

All progress comes about as the result of challenging assumptions to find better, faster, cheaper, easier or different ways to do things. That means questioning the way you do things and getting away from old ideas.

Two mistakes to avoid right now are to assume that things will stay the same or that your business can adapt to new circumstances ‘on the fly’ as they happen. The businesses most likely to survive and take advantage of opportunities (such as competitors failing) are those that have found different ways of working and done their planning.

There is always another way.

It’s always easier to go with existing arrangements and suppliers than look for new ones – but it can cost you dearly.

When was the last time you got competitive quotes for products, insurance, cell phone plans, printing, operating costs or office services? Getting new quotes can deliver significant savings.

Why not? “Because that the way it’s always been done around here.” Sound familiar?

We hear that all the time when we ask, “Why employ office staff when you could outsource your admin for up to 50% less?”…  “Because that’s the way we’ve always done it.”…

If you always do what you have always done, you’ll always get the same result (or worse).

Why not outsource? “Because we’ve always employed someone to do it”, “Because the wife has always done it”

Do you assume it’s expensive, you’ll lose control and it won’t work for your business? How do you know?

Sometimes you don’t know what you don’t know.

You probably already outsource facets of your business without even thinking about it. Who does your marketing, graphic design, printing, website design, HR consulting or manages your IT? Do these providers work from your office or theirs?

Outsource your day-to-day back office tasks too, and save $20,000 plus a year for each full time office employee. Click here for a quote.

When to Outsource

For every company, the right time to outsource is different.

When you and your current employees are unable to manage the day-to-day bookkeeping and paperwork needed to continue growing the business, it’s time to consider outsourcing.

If you are considering restructuring your business, outsource those tasks that still need to be done. Click here for the Department of Labour Restructuring Guide.

Some businesses have in-house staff to handle daily activities, but may need outside help to free up time to undertake new projects that don’t warrant another full-time employee.

For start up businesses, outsourcing from the very beginning gives cost effective access to resources and expertise that can grow with the business. You can create a virtual office and your business will sound larger than it is.

Certainly, there are big questions worth asking about outsourcing.

Is there a case for moving your team members to more frontline billable work and reducing the cost of getting those back office non-billable tasks done? How much could you save? How would it work? Can I outsource and still keep my finger on the pulse?

Now is the right time to make some of the hard decisions you may have been avoiding. Ask the question. Click here to get a quote to outsource your back office tasks.

Consider the following eight areas that could create employee downtime in your business;

Jobs -all the jobs that must occur in your business to keep the business running but are non- billable – cleaning, repairs and servicing, meetings, research and development

Rework – work that is generated from employees “getting it wrong” or from poor direction and specifications from management. A lot of rework isn’t necessarily known about by business owners as employees have a vested interest in concealing their mistakes.

Non charged work - on jobs or products which are not paid for, or work that is carried out for clients at no charge.

“Blow outs” of time on jobs – If you cost and sell a service or a job for 20 hours and it takes 25 then the extra 5 hours is downtime. This can generate substantial downtime if you do not; 1) advise your employees of the budgeted time before they start, 2) include office and administration staff in your budgeted job hours, and 3) accurately report to both staff and management actual time “Live” on jobs.

Waiting for work – employees wait for work mainly due to low sales, poor job planning, waiting for completion of previous processes, not knowing what to go onto next, helping other staff and inefficiently doubling up time on jobs.

Training – downtime for trainer and trainee, for both new and existing employees. New staff take time getting up to speed. Many business owners tell us that their new staff “take twice the budgeted time on jobs on day 1 and it takes 3 months on average to bring them up to speed”.

Stolen time – employees “steal” time in a number of ways, sometimes inadvertently, sometimes deliberately, including being late to start work “at the desk” in the morning, early to leave work, early to breaks and lunch, and late back from both, sitting around doing nothing, talking to other staff (where both employees are not working), dealing with their personal life at work (phone, texting, browsing the internet, visiting social networking sites).

Going “walk about” – poorly planned: office, equipment, supplies…

In considering the above if you estimate that your total downtime is 10% you are probably being optimistic. 15% downtime is an hour and a quarter out of every eight hour day. That’s a pretty scary thought.

How can you increase “Productive Work Time” that can be charged out?

You may consider your office and administration staff to be “overhead staff” and therefore an “overhead” cost. But when office employees are treated solely as “overhead staff” SUBSTANTIAL hours are wasted as downtime, and you have no way of accurately factoring back office and admin time into job costing or service delivery.

Two ways to reduce office downtime

1. Have your office and administration staff log on to start and finish jobs on their PC so you can see precisely the hours involved – track and report actual times on jobs (and therefore actual downtime) daily and weekly to both themselves and to you. 
2. Or outsource it – that way you only pay to get the job done – not for unproductive time.

Ask yourself – What admin tasks can be achieved more efficiently and effectively in my business?

Click here to find out how outsourcing your admin could save you money