Build Good Control Systems
June 18, 2009
Robert Hacker of GH Capital Partners has this post on his Sophisticated Finance blog titled; Ten Rules for Business Success
First, I wanted to quote this one, just because I am in IT and I liked it!;
Invest in people and IT–not boats
But that quote is not the one I wanted to reference for this post- so I will urge you to read the whole thing.
The one that I wanted to call out is this one;
Trust employees and build good control systems.
As managers in the SMB space, we have to hire staff we can trust, but too often we leave controls out completely, or just leave them to chance.
As simply as I can say it; Don’t!
Yes we are busy, yes, checking up on things can feel like a waste of time. But consider it a few minutes invested in improving your operations and financial position.
I know one SMB that suspected that their IT staffer was making purchases on company accounts that never seemed to appear anywhere. A simple control of having all purchase requests signed for makes that one go away.
Now that example is a person that cannot be trusted, but even if we do trust, lets look at the benefits that this one control;
All IT expenses must have a signed Purchase Request .
This one control can provide a SMB with many benefits. And I state that this should include recurring charges that may appear. (eg annual renewals for licences or services)
* Having a signed document helps weed out the need to have from the nice to haves
* Allows you to look at what parts of your business are generating the most IT expenses
* Allows you to review recurring charges for current applicability
* And the bonus? If you start costing out these expenses by type and area, it provides a baseline for improving your forecasting for planning and budgeting.
The SMB Takeaway
As a small to medium business, these controls may not need to be excessively complicated. But they must exist.
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Photo Credit sigma via flickr