Finance

Safeguarding your Business -afeguarding your Business - The Enemy Withinhe Enemy Within

Goodyear Fleet Tracker

On average Irish companies are losing 20% of margin each year from the bott om line due to internal theft and misappropriation. In this time of crisis there is no scope to allow this activity in business but unfortunately desperate times will result in desperate actions by some.

Th ere is no reason to believe that transport fi rms are below average in these stakes and it is frightening to believe that hard earned profi t can disappear before the eyes of the owner/senior management due to employee activities. Many fi rms choose to ignore this threat, with those at the top burying their heads in the sand and bemoaning the low profi t refl ected on the end of the business year’s Balance Sheet. Other company owners look to control and reduce internal slippage. To help counteract this happening, here are a few suggestions.

Th ere are two elements to look at; 1) staff recruitment, training and monitoring and; 2) internal control procedures and culture within the business.

Ireland now operates in a culture where right and wrong seems to be an old fashioned sentiment, employees live transient lives, employers no longer know the history and background of employees and a job for life is a thing of the past. Careful employee selection, especially for high risk areas where there is a direct access to funds, materials or company confi dential information, is an absolute necessity. Be sure to double check references, get real data to make the decision, use all sources of information to substantiate what is shown as fact in their CV. Please remember that 10% of employees are strictly honest, 80% can be swayed, and 10% can and will rob blind no matt er what controls are in place! It’s not uncommon for the security staff to be robbing from the company property so what hope has the business of controlling any other theft ?

No matt er who is employed, strict procedures and controls must be put in place to monitor staff . If not there will be losses. Having clearly defi ned roles, as well as having a number of people involved in each step of the process rules out the risk of one individual with all power and authority ripping off the business. Controls have to make sense and be implemented and monitored by someone who has common business sense. Business owners are well aware that having a fl eet of vehicles on the road, fuelling externally can be fraught with risk. Technology and monitoring reduces this risk but we have all been in service stations where you see the van and the spouse’s vehicle being fi lled simultaneously. If there is a culture of poor control in the business when the company was small, it may be very diffi cult to stamp it out as the fi rm grows. Remember a Revenue audit may not determine the owner as the victim, but complicit in this situation, and may add a further tax and penalty charges due to the lack of control within the business.

Make sure that the business is monitored and controlled and that there is more than one individual with total control. Reallocating duties on a revolving basis and monitoring staff loss will reveal a lot about the business. Honest staff will leave rather than become part of a dishonest process, but as a rule of thumb they never explain why they are leaving. Look at the staff holiday rota and those that keep their duties and roles totally to themselves - is it an ultra-dedicated staff member or someone that wants to keep their internal processes to themselves? No system or procedure is fool proof and while the annual account process may root out any wrongdoing, it’s more likely the external accountant is more interested in simply reconciling control accounts and the correct format of expenses than fi nding real issues within the business. While employees, if recruited and managed correctly, can be a business’s greatest asset, the opposite is also the case if business ethics and standards are not adhered to. Remember to create a compliant culture, recruit the right people and, especially in this crisis, be on top of the fi nancial management of the business.