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HomeBusinessYour Business Is Leaking Money – How to Spot the Cracks

Your Business Is Leaking Money – How to Spot the Cracks

You’ve had several great business deals recently and your partners have paid for your services on time. Your employees seem to be honest people. The accounting company you work with is a reputable business. And yet, your income isn’t as high as it should be. On the contrary, it looks like there are some secret cracks inside your enterprise that leak assets. Here’s how you can identify who or what makes those cracks.

Analyze the previous debts

The first stop on your little investigation quest should be the accountant’s office. Tell them about your suspicions and try to come up with a smart solution. For instance, go through all the financial reports on the payments made by your debtors over the last couple of months. It might happen that some invoices weren’t sent or delivered on time. If you’re still using an old-school invoice system, it’s time you started looking for a modern invoicing solution. This innovation will reduce the level of making mistakes during invoicing.

Moreover, perhaps some of the debtors still haven’t paid their debts and the accountant verified them as paid. If so, send a polite reminder note to those debtors. Also, give them a hint that you’ll take some more serious measures if they ignore this letter.

Check the due payments

Some businesses are under huge pressure during some parts of the year, which can lead to unintentional mistakes. Let’s say you run a retail store in December. There’s no need for any further explanation, right? The rush and shopping frenzy, characteristic for that part of the year, can cause errors in huge companies, let alone a small retail store.

So, what each of the owners of such special ventures can do is check all the payments that are due soon. When a large number of payments are squeezed in a short period of time, it might happen that you’ve already calculated the ones that still haven’t been made.

Search around the house

If there’s a leakage in a house, the most logical move is to thoroughly search the house. This means that you should summon your team leaders and heads of departments, to inform them on the financial difficulties the business is going through. Also, make sure you don’t point your finger to anyone. Still, hold a possibility that there might be an in-house perpetrator. For instance, someone from inside might be taking out different inventory items. You might not notice anything is missing, since those items are regularly added to your to-buy lists. So, here’s where you should conduct a detailed inventory check. If any items are missing from the previous inventory list, it’s clear that an insider is doing damage to the business.

Take it to a higher level

In crime novels, sometimes detectives are actually protecting the perpetrator, thinking that someone else committed the crime. Therefore, if you haven’t located the leakage using the methods presented in the previous paragraphs, it could be someone from the accounting company. While they might be a reputable enterprise, they’re not immune to hiring wrong people. So, your next step should be analyzing their reports. Obviously, you can’t do it on your own, because it’s a complex procedure. What you should do instead is use the benefits of forensic accounting. These specialists can examine every single figure on every single bill, invoice or any other financial document. That way, you’ll see how justified are the suspicions you’ve had about the quality of your accounting services.

When you realize your income doesn’t match the workload you’ve done, you need to react at once and discover what went wrong. That way, you’ll stop the asset leakage and save your business from any further damage.

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