In designing a control system, you should take into consideration whether the cost of a particular control is reasonable in terms of the benefit you want to achieve.  Segregation of duties may be the most desired internal control but may not always be attainable if you are small.

Here are some quick tips to mind your control over cash:

Tip #1  Record client payments in a cash receipt log.  Ideally, the person that opens the mail and records the client payments in a log and the person that makes the firm deposit are two separate employees.  If you cannot segregate these duties, implement a reporting mechanism that the bookkeeper (or secretary) must provide you with a daily log of client payments received.

Tip #2  Require a W9 from all accounts payable vendors.  To avoid paying fictitious vendors, require a form W9 from all of your vendors.  This won’t prevent a dummy company from being set up in your system but certainly will help.  Require all of your checks be signed by the owner with appropriate back-up documents for review.

Tip #3  Retain a 3^rd party to conduct your bank reconciliations or at the very least have the outside company audit the books at least quarterly.  Don’t have the person that makes the deposits and applies the receipts also do the bank reconciliations. Segregate duties where you can.  When you are small, that is nearly impossible so put some checkpoints in your systems to avoid fraudulent behavior.  Get outside assistance.

Use an outside service to process your payroll.  Remove the tax reporting liability from your responsibility. Have all payroll registers sent to owner/Managing Partner for review.  Look for unauthorized salary adjustments, overtime or ghost employees.

Tip #5  Unauthorized purchasing on firm credit cards or accounts.  It is not uncommon for personnel charged with the purchasing of supplies to add personal items to the “cart.”  Intentional or not, have a system in place to make sure you are reimbursed for personal items purchased on your account.

Fraud can occur in any organization.  Unintentional errors can too.  Every business, no matter the size, should have steps in place to detect fraud and “audit” their financial information.  The use of an outside accountant is the small business person’s professional resource to ensure that operations are as they should be.

Who is minding your cash?

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• Saves time
• Saves money

When an attorney or legal assistant is spending valuable time on administrative and management issues rather than practicing law, billable hours are lost.  Outsourcing financial management will allow the attorney to do what they want to do – practice law!

Law firms of every size are continually evaluating their financial and business management model.  With the economic downturn and the increase in lawyer to client ratios, more and more attorneys have to stringently review overhead where they may have been able to overlook it before now. Unfortunately, many times their focus moves from the practice of law to worrying about the day-to-day operational issues to save on expenses. This can be a fatal mistake for the lawyer’s practice sustainability.

A solution is to outsource the financial management of your firm to professionals who are experienced, knowledgeable and can handle your back-office efficiently. Outsourcing financial management to a team of accounting and finance professionals saves the firm time and money because they can offer planning, forecasting, budgeting, variance analysis, profitability analysis, financial reporting, general ledger accounting, billing and collections, cash flow control, banking relationships, investment, tax planning, tax reporting, trust accounting, payroll, pension planning, and other financial management functions at a fraction of the cost of hiring someone on your staff to handle these functions full-time.

For solos and small-size firms (10 attorneys or less), the expense of hiring a person to manage the accounting and finance functions could be very costly (salary, taxes, benefits).  Often this function is coupled with another function in the office – office management, legal assistant, or receptionist.  The accounting function can be viewed as secondary to the other responsibilities especially if that person has no accounting background or experience. Errors, lack of accountability, poor reporting are all signs that your accounting function is being neglected. This function is the backbone of your firm; trust it to someone who knows how to crunch the numbers.

Partner with a group who has your back!   We can help!

For many companies, using salary to compete for top talent is often a losing battle. But talented employees often look for several other qualities in jobs when deciding whether to make a move.

By Ethan Rouen, contributor  http://management.fortune.cnn.com/

FORTUNE — The team at Scott Belsky’s company, Behance, is made up of people he calls “long-term greedy instead of short-term greedy.”

They understand that the fast-growing business, which serves as a web platform for creative professionals to showcase their work, often requires its employees to blend their work and personal lives and to think about work beyond normal business hours.

Behance staffers also understand, Belsky says, that it’s not the type of company where they can walk into the boss’s office to demand a raise, and where pay decisions often come down to paying staff more or hiring more people to manage the company’s growth, which currently receives around 50 million page views a month.

“We believe that you should be paying people as much as you can,” says Belsky, who co-founded Behance five years ago and serves as CEO. “As a small company, we can have true transparency. Everyone knows what is being made and what is being spent. No one is going to come up and say, ‘I want more.’”

Even though the unemployment rate is at a stubborn 9.1%, many companies, aware of the challenges and costs of replacing employees, are dishing out annual raises to keep their best performers. A recent study by human resources consulting firm Mercer found that on average, companies will increase their best employees’ salaries by 4.6% this year.

But for small businesses with tight salary budgets, using pay to keep top talent from going to larger rivals is often a losing battle.

“Raises increase your fixed costs, which can be a challenge for smaller companies,” says Catherine Hartmann, one of the principals at Mercer who oversaw the study. But “in small businesses in particular, the loss of a top performer has a much more significant impact on the bottom line.”

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The celebrated entrepreneur shares his music industry experience as an example of finding opportunities in change.

In business, change sometimes happens more quickly than you want it to – transformative technologies arrive suddenly and economies shift. Telling your staff to embrace change and get creative is all well and good, but that will not address their (or your) underlying anxieties. The reality is that change is usually a threat – one that has the potential to bring your business to a halt.

Related: Seven Ways to Boost Employee Morale

Given Virgin’s long experience in the music industry, I often receive questions from readers about the industry’s future. How can anyone successfully launch a business in this sector when transformative change is stressing even the nimblest players?

Our experience shows there is always opportunity in times of change. The pundits who have predicted the end of the industry should remember the last time it was in meltdown: 1982. The economic recession was having a deep impact. Many people were home-taping off the radio or from a friend’s LP – a forerunner to illegal downloading.

At the time, Virgin Retail had over 100 record stores across the U.K. On weekdays they were deserted. Then we learned that the CD was about to take the market by storm.

The new format’s advantages were immediately obvious. It was much smaller than the LP, and there was no wear, distortion or surface noise. My notebooks from that period are full of questions about the potential impact on our business. I wrote: “What happens to the record collection around the country – do people replace their vinyl with CDs?”

Related: The Dusty Groove America Record Store Keeps on Spinning

At first the only way for us to survive was to start clearing the decks for the new stocks and discounting our LPs. We succeeded in switching our business over to CDs, which not all competitors did.
We could also see the dawn of another retailing phenomenon. Two years after the introduction of the personal computer in 1980, there were already nearly 500,000 video-game machines in use in the U.K. Soon, selling games and then films became a worthwhile sideline for our stores.

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