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The Value Of Internal Controls and Why Your Business Should Use Them

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When applied correctly, Internal controls can streamline company workflow and build client trust.

Internal controls are a series of company rules that maintain the integrity of all financial and accounting materials. If your company is disorganized, makes frequent errors, and suffers from constant setbacks, then a system that can address each of these issues will improve business efficiency.

For example, if you have no internal controls, there is no protection against fraud, and your client base could suffer. Or, without standard policies or procedures, employee training takes much longer. Worst of all, without a responsible review system, mistakes that can deter valued customers might appear in high-profile work.

Everyone, including your clients, benefits from having an open, precise, and viewable set of practical guidelines. If possible, install internal controls in your business to improve your company’s reliability and efficiency.

Internal Controls Promote Business Reliability

If you do not currently have internal controls, document reliability disappears. With no reliability, your accounting can become confusing. Use these three Internal controls to build dependable financial documents that your clients can trust:

  • Reconciliation

Reconciliation confirms that all account totals are accurate. Two pairs of eyes are always better than one – having two experts double-check all produced work reduces errors. This is especially important for all your financial documents. One small number change could mean massive shifts towards your economic outlook.

Setting up an internal control that verifies all your paperwork, by both a computer database, an expert accountant, and any additional employees is another standard you can uphold. You could install a monthly reconciliation control where you balance the budget against company records on the first day of each month. Correct filing builds customer rapport, and accurate sums allow for smart decision making.

  • Data Privacy and Information Controls

As accounting becomes more digital, internet transfers must protect customer information. It is your job to safeguard your clients’ privacy, and with proper internal controls, you can manage that task with ease.

One possible solution is to input systems that only allow authorized administrators to access documents. You add insurance to management that way, and it prevents any potential tampering.

Additionally, you can use software applications that encrypt data with two-step passwords. Not only does this speed up document retrieval for further increases in company output, but it offers extra comfort to your clients.

  • Fraud Protection

Besides all the benefits listed, internal controls for fraud are a government requirement. Laws and regulations designed to minimize fraudulent activity are put into action through internal controls. Industry regulators expect you to have clear company documents that outline how you are minimizing fraudulent situations within the business. Fraud controls offer all stakeholders protection against deceit, and it adds bonus layers of insurance in the case of breakages.

Internal Controls Promote Company Efficiency

Internal controls can also help increase business operation speeds. Use the following controls to minimize insurance risk and enhance overall function:

  • Review Systems

You support both your clients and your employees when you install an overarching review system. For example, when an employee files a client cheque, not only is that cheque stamped and verified, but it goes to a second manager who further confirms the transaction. The review procedure minimizes error, but it also gives the client absolute assurance that their hard-earned money is safe. The review system also protects employees: in the case of mistaken fraud,the review system can confirm the truth of all claims. It creates accountability within every transaction. Everyone feels supported by management review controls.

  • Company Policies and Business Procedure Controls

Documents that outline standard procedures can improve how a business functions. With detailed training manuals, company members can learn the quickest and safest methods for completing a project. Building performance policies increase company communication, and that will only lead to better customer engagement.

  • Segregation of Duties

In addition to company policy, internal controls firmly announce the responsibilities of each employee. Segregating the duties of each employee promotes a clear business structure that will improve efficiency.

Management is also empowered to correct improper company actions. Employees will understand their duties and complete tasks that fit their skills.You can even build in incentive rewards towards sales goals to help foster teamwork, all with the outlines made through an internal control.

Your Own Internal Controls

If your company could benefit from increased financial reliability and work efficiency, consider implementing a series of internal controls. Review systems, employee policies, and reconciliation all improve accountability, resulting in a healthy business model. As you utilize internal controls to protect your company, watch brand trust and client satisfaction skyrocket.

Hire an exceptional service provider  to take care of your books for you. When you hire LedgersOnline, we won’t just balance the books – you’ll get guidance on the next business steps to take and how to get your cash flow running more efficiently.

Schedule a call today to know more about getting online with LedgersOnline.

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