Surviving the Recession Mini-Series

Episode 04. 3rd Key Factor Cash Protection

Kim Radok 13 May 2020

Episode 4 - 3rd Key Factor - Cash Protection

If you wish to survive the next few years, you must protect every dollar leaving the firm and quickly seek the return of every dollar owed to your business.

In other words, you need to ensure every payment made has been properly authorised and you are not paying fraudsters. Likewise, getting paid for all outstanding invoices as quickly as possible if you sell on credit, is also essential.

Protecting the cash in the bank, is relatively straightforward in one sense and for most business, treated properly and with a degree of adherence to risk management norms of behaviour. However, in these tough times, it would pay to review everything you do and complete an audit on due processes and take extra precautions.

Due diligence and vetting all suppliers and customers to authenticate ownership and trading terms is a must. Likewise, monitoring and completing due diligence on all emails received to ensure you only pay authorised invoices.

Whilst reconciling the bank account(s) is a normal practice, completing reconciliation of suppliers and customers accounts is not often completed these days. Moving forward, it is a MUST that every supplier and customer account now be reconciled. Reconciliation of these accounts allows you to pick up duplicate payments, payments for cancelled invoices, making sure every deduction by customers has been authenticated etc. It would wise to remember the old saying, “computers don’t make mistakes, people who input data do!”

We are now living in an age where fraud, in all its forms, is a major business hazard. Fraudsters are very good at what they do, because that is their business. I cannot emphasise enough the importance of supplier and customer account reconciliations, due diligence, maintenance of business disciplines and good processes, which are required to protect your business’s cash in the bank.

To further assist in protecting your cash, the employment of qualified and dedicated professionals is the final factor to help ensure the above issues are complied with and followed through. The right people may be annoying with their questions and suggestions, strict adherence to procedures and wanting to do the “right thing”. However, they are able to do things that technology can never do, well at least not yet.

At the end of the day, bad technology and installed for the wrong reasons will aid and abet fraudulent behaviour, add extra work and fail to resolve problems, which will have to be resolved by people. You may as well invest in good people from the start.

If you wish to survive the coming recession, cash will be essential. Protecting your cash properly therefore, is a no brainer!

This concludes the third key factor; cash protection. After a short break we will review the next key factor, employees and contractors.