Monday, October 8, 2007

Cheque Tips for Safeguarding Your Business

In the last Profit Pointer, we provided some tips on safeguarding your business against bookkeeper fraud. One of our tips was that you be the first person to review your bank statements each month. Below are more tips that deal with writing cheques.

  • Get a banking package that returns your cheques to you each month. This gives you the ability to physically review all the cheques that have passed through the account.
  • Look at the signature line on all of your cheques. With the prevalence of automated banking, the signatures on cheques are no longer verified by a human being. This means that cheques with no signature or fake signatures (even crude fakes) can pass. Make sure it's your signature on every cheque.
  • Write post-dated cheques with extreme caution. Again, because so many deposits are put through automated banking machines, cheques are often not manually reviewed until after a deposit has been made. A supplier can deposit a post-dated cheque at any time and there's a good chance it will still go through your account.
  • Match up cheques to a supplier's invoice. If there's no invoice, investigate. Where is this money really going? Also, keep an eye out for phony or inflated invoices. One way to minimize the risk of a phony invoice is by having purchase order numbers and matching those numbers to invoices.
  • Keep an eye out for duplicate cheques. One bookkeeper had a nice racket going with the two partners of a firm. Each partner had full signing authority on the bank account. Every month, the bookkeeper would present a cheque to the first partner for her invoice. She would then present an identical cheque to the second partner for the same invoice. Because neither partner checked the bank statements, no one was the wiser.


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