One of the biggest mistakes you, as a business owner, can make is delegating things to others that you need to be watching over. This is your business. You gave birth to it, and the final responsibility for its success or failure lies with you. Watch over what belongs to you; this includes your company’s money.
Delegating duties is one thing. Delegating responsibility is another. Don’t give the responsibility for safeguarding your company’s cash to someone else. Many have tried this approach but few have succeeded. Disaster is the typical outcome.
I understand that you may feel burdened, confused and even overwhelmed by the day-to-day accounting details required to run your business. You may have the type of personality that’s happy to turn it all over to someone else to manage.
I’ve known many entrepreneurs who have eagerly turned over the entire financial function to someone else (perhaps even a partner) only to find later that the partner “responsible” for the finances was embezzling money from the firm. The embezzler may or may not go to jail, but the remaining partner ends up out of business and embarrassed. Even if you manage to save your company, your reputation may be so damaged that future success is unlikely.
Remember most frauds go unreported, and even scarier is the fact that even more go unnoticed. Fraudsters go from company to company committing the same crime(s) over and over again. Only 6% of fraud perpetrators reported in the ACFE 2012 “Report to the Nation” had prior convictions and only 7% had been previously terminated by an employer for fraud-related conduct.
When hiring someone to assist with the financial details don’t be impressed with fancy talk or a slick performance or even a prestigious degree. Ask questions. Since you have the final responsibility you have the right to ask questions. Insecure people may be offended by questions, but it’s your responsibility to know what’s going on in your business. Don’t assume everything’s fine if you really don’t know that it is.