Many small and big businesses lack proper business control systems and are just focused on production or service issues. The business may be too small to employ an accountant, let alone a person concerned with quality control. Here it is put to be at a good use to have business performance standards
Having a business control system allows you to monitor, measure and adjust where necessary your organization’s performance, whether it be sales, production capabilities, or general efficiencies. In other words, the purpose of business control is to identify unfavorable business performance so as to fix appropriate actions can be undertaken. The business control process involves several activities such as:
A control systems can be adopted for any aspect of business performance that is measurable. Having business decision in working order to uplift the profit, definitely you must develop a business control system, tailored to your specific requirements.Internal controls are useful for every business but are critical for companies with employees who handle valuable assets. While internal controls are crucial for helping you detect mismanagement, they can also help you reduce the risk that simple mistakes will keep you from seeing your company's true financial picture in quarterly. Why say quarterly? You should put in a business standard system which will not take to long to detect and eliminate unnecessary operations causing loss in you business.
As much as you want to think the best of the people working with you in your business, the sad fact is that a lot of people are dishonest. Whether the scale is small or large, that dishonesty can cost your business and a lot of money over time. Any employee can become un honest by stealing some money and not just money that can be stolen, although that does not happen a lot; many employees think it is normal to take home office supplies or small items. That may not seem like a big deal compared to someone embezzling a lot of money from the bank accounts or company coffer, but it still can add up to quite a lot in the long run and can do great lose.
Setting up a system of internal controls can keep such problems from getting out of hand. When you have internal controls in place, you're protecting your business as well as the accuracy of your accounting records. The types of controls to put in place depend largely on the size and nature of your business; for example, a cash-intensive company with many employees would require more control measures than would a few employees operation where virtually with few cash changes hands in the normal course of business.
Internal Control Principles
The idea behind internal controls is to create an environment where mistakes are less likely and dishonesty is easily caught. Most of these principles will seem like plain old common sense, but you might be surprised at how many small-business owners neglect to use such a system.
At the most internal control level put some simple physical controls in place. Always remember to keep cash in a safe; keep your warehouse locked and limit access to the key. This has to go with any cash control computer to be sensitive and should be password-protected to safe guard files not to be tempered. If you have a lot of employees who work different shifts, get a time clock to track hours worked. Make sure all transactions are immediately documented, and separating related duties.
Documents are the evidence that a transaction has occurred, in addition to being necessary for accurate record keeping. Typical internal control documents include cash register, signed delivery slips, and pre-numbered invoices (so you will know if any are missing receipt numbers). For example, having only one employee receiving the cash and register at a time, making you know exactly who's handling the cash at any given time.