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“All the most honest person in the world needs to make them a thief are two things – Need (which is in their mind and you can’t control ) and Opportunity (which you have control over).

– Craig C

Rule # 1 – Never have the same person doing you’re A/R and A/P (check writing).

From Craig Crabtree – Simple Numbers Fame:

The above quote is why you read every day in newspapers across the country that a loyal employee who has been around 15 years and is the PTA president and family friend stole $500,000 from her employer.

Fraud is a reality for most businesses. It can be as small as taking home office supplies to as large as million dollar embezzlement. 23% of fraud cases involve losses greater than $1 million; on average, fraud costs $7,310 per employee per year.

Most of the risk will be a few categories: petty cash, inventory, payroll, and fraudulent bill or invoices. Internal controls and division of duty are the primary protections for a company, but these can be a challenge for entrepreneurs due to the size of the accounting department. Entrepreneur companies tend to have one person who is in charge of receiving and processing payments, making deposits, payroll, and reconciling all accounts. The risk can be great.

One step that can help provide some protection is the Simple Numbers accounting rhythm. The weekly reporting rhythm can help the owner have visibility into the money coming in and the money going out. The good news is that this reporting structure is easy to implement and easy to review. Each week your bookkeeper should send you at least the following data:

  • Amount of the bank account and the amount of the accounting software bank account
  • List of all bills by vendor along with the due date in a chart (including payroll)
  • List of all deposits made daily
  • Amount of A/R broken out into current, 30 days, 60 days, and 90 days
  • List of all expected payments to be received over the next two weeks

The above reports can be pasted into an email and should only take about 15 minutes each week to prepare. While these reports will not prevent all fraud, they will give accountability to the people responsible for accounting and provide insight to the entrepreneur on the normal business rhythm. For details and support on how to implement, check out our sample reports on


PS – This is a typical pain/problem/want/need you as a business owner run into weekly in your business. That is why I have built the Pain Relief Vault. You never know what will come up, so you have 24/7 access to proven solutions/best practices for any problem you run into. For more best practices on this topic with the tools to use to execute the best practice subscribe to my online coaching.