How To Protect Your Small Business Line Of Credit
Posted by Jonny Kickinson | Filed under Finance
If you are a firm owner of a convenience stores, printing shops, or other services, how do you go about to protect against bad firm practices? If you own a small business chances are you’ve probably developed some credit lines with local vendors. If you have a business that has employees then you may be in a position of having to trust other people to use those credit lines on your behalf.
Businesses frequently have employees such as delivery drivers, someone who fills out expense report. Some people that are trusted to pick up tools from time to time. For example if you own a carpentry shop, plumbing company or other such company. You may be the boss and you often need things so you don’t have the time to be running out to the store every time someone in your store needs something. So then the obvious solution is you direct someone to go out and do it. Unless you want to give that person a check every time you need something you have already established some sort of credit line.
Commonly the company the credit line will have the person picking up the item sign an invoice to acknowledge the payment for their records and then give a second copy to your worker. It is your employee’s responsibility to give you that copy so you can pay the bill when it is due. Over time as the person doing your shopping becomes known to your suppliers, then the opportunity for abuse manifests itself.
When it comes time for you to the bill, you should make careful notes about it. This is your opportunity to check and see if any other activity occurs in the background. Check the invoice for things like the date the purchase was made and time did they make the purchase? Was the purchase made during normal company hours or was it after? Often such bad purchases are made on a weekend. People that abuse your trust many times will try to do things after hours and tell the vendor about staying late.
There are certain steps you can do to avoid the problem. Most suppliers keep a list of official signors from your company. That way if you see a signature you do not distinguish the vendor can be held reliable for granting the payment. It will still be your duty to handle the employee and their action. You can also request the vendor to send copies of all invoices to you so that you can verify all purchases. You can make it known to your employees that you do check all the statements and expenses from your vendors just so that you can discouraged them from doing something they shouldn’t.
Almost all employees would never consider abusing the faith given to them by an employer but there are always certain people that feel they can get one over on the boss. They could want to get back at you due to not giving them a promotion, or being disappointed about some outcome. The point of course is that it does happen and it’s better to be safe than sorry in the future.
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