Safer Banking Habits

January 9, 2012

Small business owners are increasingly taking advantage of expanded online banking services rolled out by banks in the last decade. At the same time, we see many businesses continuing to use traditional paper checks to pay bills. Whether businesses are banking electronically or with paper, there are certain risks to be aware of. One of our goals at SmartBooks is to provide clients with great accounting controls to reduce the risk of fraud. To that end we share recommendations based on banking practices we have observed over the years. 

Online Payment

Online payment systems are often used without checks and balances, so that anyone with access to the online banking system can issue payments. Furthermore, there is no audit trail to show which user issued payments. To mitigate these risks: 

1. Set up separate usernames for each person who will be accessing your online banking system
2. Provide access to the online payment module to only those users who need it
3. Do not delegate access to online payment systems unless you can set up a two-step payment process so the owner can have the bookkeeper queue up payments but the owner must then approve the payments before they are sent
4. Do not make an owner's personal account accessible alongside the business account. That way if access to one account were to be compromised, the other would remain safe. In addition, it may not be appropriate for other staff to have access to the owner's personal information. 

Check Payment 

When paying bills via paper checks, there are often insufficient controls around check stock and the signature process. To mitigate these risks:

1. Do not store blank checks in the bookkeeper's or office manager's desk. Keep them locked up in an owner's office and provide check stock only as needed to print and mail checks. Collect unused checks after each check run.
2. Although it may save you time to have bookkeeping staff forge owner signatures or use a signature stamp to make payments when the owner is not available, that removes one of the most important controls. Have checks signed by an owner or someone other than the accounting staff who process the bills so that at least two people are required to issue a payment. 

Bank Statements

Regardless of how rigorously you control the payment process, ultimately owners should review bank statements to ensure they recognize the identities of parties being paid and that the payment amounts look reasonable. Reviewing monthly bank statements does take time, though consider the value of deterring fraud and detecting any that should occur. 

A Better Option

SmartBooks uses a powerful and easy online accounts payable system to address all these risks, and many more. It is more efficient than using online bank payment systems. It integrates document management with an online approval workflow to make sure clients approve all bills before they can be paid. If you would like to learn how SmartBooks can make your accounts payable process more efficient while protecting you against fraud, please contact founder Calvin Wilder at cwilder@smartbookscorp.com  or 978.202.3064 x700.