One of the first things I emphasize to new clients is the importance that a professional team can make to a growing business. Having a team which includes a lawyer, accountant, banker, HR advisor and insurance advisor can mean the difference between smoothly-integrated advice on a regular basis and a frantic phone call to a lawyer or accountant when the pieces don't all fit together. It also means that your professional team must talk and share relevant information… often informally… to your advantage, so that the pieces do fit as you grow.

Another advantage of working with well-connected team members is that they bring to the table a community of resources who share expertise in a myriad of ways. And this is exactly how today's topic came about… professionals sharing war stories and suggestions on how our clients can avoid similar tragedies.

My friend, Yvette Ullom of Bean Counters, Inc — a Rhode Island-based company providing outsourced professional bookkeeping and comptroller services to small businesses in Southeastern New England — and I were sharing just such a war story recently, as each of us has had to assist clients who have been victims of employee theft.

As I shared with Yvette the options which now faced my client… none of them very pleasant, admittedly… Yvette suggested some tips to share with other clients, aimed at preventing just this kind of situation:

• Have bank statements mailed to the business owner's home. When they arrive, review them… not to actually do a reconciliation, but to look for anything out of the ordinary. Review the cancelled checks, review the signatures, and review the endorsements on the back. Look at the numbers for so-called skipped checks (checks which have not been returned to the bank within the statement period) for any unexplained patterns or anomalies.
• Separate the task of reconciliation of bank statements from the task of cutting and/or signing checks. In other words, maintain a simple "check and balance" system so that the same person is not performing all of these tasks. Granted, this can be a challenge in a resource-constrained small business, but it's one worth meeting.
• Have the bookkeeper give prepared checks to the business owner — in unsealed, stamped envelopes, ready for mailing. Again, separating tasks so that all responsibility does not reside with one employee. Spot check them on a regular basis and mail them yourself.
• When checks have been prepared, but are waiting to be released (as is occasionally the case when a small business owner is awaiting sufficient cash in the bank account to be able to send out vendor payments), hold them yourself, rather than letting them sit in the bookkeeper's office. When the bank account has sufficient funds, send them out yourself.

If you aren't operating with this kind of "check and balance" system, it's time to sit down with your outside accountant or outsourced controller and review your internal bookkeeping procedures.

Worried about how your trusted bookkeeper of decades will accept the "new way?" Yvette suggests you just explain the need to update your systems upon your accountant's advice, and in light of current good business practices.

In the words of Benjamin Franklin… an ounce of prevention truly is worth a pound of cure and a little precaution before a crisis occurs is preferable to a lot of fixing up afterward!

Widett and McCarthy helps small business owners start, grow, acquire and sell their businesses.

We serve as "in-house counsel"… on-call when needed, but not part of the company overhead. Our best clients understand that the relationship between lawyer and client is a two-way street, built on information sharing and problem solving.

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