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Do You Have a Loyal Bookkeeper? Watch out!

Originally published: 10.01.17 by Ruth King

Make sure your loyal bookkeeper is loyal to your company. You know the type: she has done the books for the company for a very long time. She is usually accurate. She comes in early and stays late to ensure you get financial statements on time every month.

You have the perfect employee: hard working, dedicated and accurate. But do you?

What if she never takes a vacation? Sure, maybe she takes a day here or there, but she never takes a full week. Her reason is that payroll is due every week and no one else can do it.

That could actually be a red flag. Here’s the story of one company owner who had the “perfect, dedicated bookkeeper.”

As it happens, one day this “perfect” bookkeeper got sick. She didn’t come in to work. This was rare, but the company survived the day without her.

Then she was still sick for a second and third day. By this time, the contractor needed to get checks sent to vendors and payroll was due.

Someone had to do it so he went into her office to do it himself.

While stumbling around in the accounting software, he discovered there were many payments made to vendors with

direct payments. He saw loan payments, credit card payments, office supply company payments, gas card payments and others he recognized. Then, there was one he never saw before.

He found consistent payments to this vendor for years! When he added it up, it was more than $90,000. None of the payments were huge, so he never would have noticed it unless he did what he had done: go into the bookkeeper’s computer accounting software. So, who was this vendor?

It turned out this “perfect, loyal” bookkeeper had been embezzling for years.

A little every month, not noticeable to the owner since it was a direct payment and he didn’t sign a check. It added up to a lot of money over the years.

Here’s what you can do to protect yourself:

See all of the cash withdrawals from your checking account. It’s best to look at your bank balances on-line every day. You can see everything that is added and withdrawn from your accounts.

Insist that everyone take at least a week of vacation. This way, someone else has to do that person’s job and that is when you find discrepancies.

Banks Can Make Mistakes

On the flipside, here is a story of how a bookkeeper proved the bank was wrong.

She prides herself on being accurate. She always checks her work and doesn’t make mistakes often. When she does, she’s embarrassed and feels terrible (so she tries to avoid those feelings).

The company gets many checks and a little cash in the door every day. Their bank deposits are often an inch or more thick with cash and checks.

When preparing the deposit, she counts the dollars twice and lists every check on the deposit slip. Most times, there is more than one deposit slip. She backs up her addition with an adding machine tape and checks the amounts against the amount she enters into the adding machine.

Then, as an additional back up, she copies all of the checks, cash and deposit slips. When she gets the receipt from the bank, she staples it to the adding machine tape and copies of the checks, cash and deposit slips.

Then, she is confident that the deposit amount is correct.

One day, however, the company got a notice from the bank that they were debiting their account for about $8,000 because there was a mistake on the deposit.

She knew there was no way that was possible, so she went back to the deposit in question and added all of the checks and cash from the deposit slip. It was right.

In addition, she found the copy of the check that exactly matched the amount the bank was debiting to their account.

She took all of her backups to the bank and showed them the deposit slip and the copies of all the checks and cash.

She showed them her adding machine tape matching the amount on the deposit slip, and she showed them the copy of the check for the exact amount of the debit.

This was proof they had deposited that check. The bank made the error. Somewhere and somehow they lost the check.

It wasn’t a mistake on the bookkeeper’s part. The bank credited the company’s bank account for the amount of the check.

Here’s what you can do to protect yourself:

Always make an adding machine copy of your deposit and copy the cash and checks that make up the deposit.

Yes, this takes time, however, it could prove your addition was correct.

Banks do make mistakes. You don’t want them making a mistake with your money.



About Ruth King

Ruth King

Ruth King has over 25 years of experience in the hvacr industry and has worked with contractors, distributors, and manufacturers to help grow their companies and become more profitable. She is president of HVAC Channel TV and holds a Class II (unrestricted) contractors license in Georgia. Ruth has written two books: The Ugly Truth About Small Business and The Ugly Truth About Managing People. Contact Ruth at ruthking@hvacchannel.tv or 770.729.0258.

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