Article

Internal Controls for Contractors

controls.png

A new series by Contractor Mag highlights some accounting basics that all small contractors need to know. In the latest article, the author highlights some internal controls all businesses should implement in order to prevent fraud. Here are the some common problems and the internal controls you should put in place to handle them:

Forged/Altered Checks
There are a couple ways to forge checks, but the first step against prevention should be to limit access to blank checks. You should have one person write checks, and another do the bank reconciliation, and also have bank statements sent to an address outside the office. Another option might be to establish secure online bill paying.

Billing
To prevent inflated payments to vendors, or double-payments, it's important for a business owner to occasionally double-check the approved vendor list. Check the system to make sure there aren't any suspicious cleared or voided checks. Cross-reference billing addresses with employee address. And as always, make sure a separation of duties is in place.

Stealing Cash
It is particularly easy for contractors or subcontractors to steal cash from the company. When they provide a service, they may ask to be paid in cash by the customer, destroy the service ticket, and say the job was cancelled. A technician could ask for a check to be made payable to him personally, and then alter the check. One way to prevent this might be to follow up with customers after service calls.

Inventory Shrinkage
Sometimes employees take materials from the office for personal use. With contractors, they might even “borrow” materials for use on their own side-job. Keep your materials secure, and make sure your shop is monitored with a security camera. Doing a regular inventory helps a company stay abreast of any variances.

Establishing some simple internal controls to will go a long way to prevent your business from being a victim of fraud. Check out the full article from Contractor Mag here.

Excited Latin American woman at home working on her laptop and winning something online - success concepts

Easy, Easier, and Easier Still: 7 Big Updates to PEX Software

Modern technology and networking concept, woman using laptop, tablet and smartphone with virtual screen API icon Software development tool. API Application Programming Interface.

Integrate With PEX and Automate Financial Processes: How to Make Operations Simpler & More Secure

Young woman analyzing bills while writing in diary. Beautiful female is using digital tablet at table. She is sitting on sofa at home.

How PEX Leads the Way in April’s Financial Capability Month & Beyond

Stay up to date on the latest PEX news!

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s).