Controls are the intelligent procedures, processes, and safeguards that protect our company from uninformed or inappropriate decisions or actions by any team member. But we also need to empower them with the ground rules, feedback, and double checks they need to do their best work. This is where business controls come into picture.
Building strong internal controls is about enhancing and giving control to our business. The best controls will correct default behavior to the right behavior. And they empower your team to get best results with minimum effort by giving them immediate feedback and a more defined role.
Good controls also empower managers and leaders with immediately clear and actionable information on how to coach and redirect a team, by letting them know what’s going on in an area at any given time.
Here are 35 examples of business controls in five categories that most businesses will require to successfully scale. Building controls will not happen suddenly; it needs to be implemented over time.
Business owners fear possible financial mistakes if they don’t personally control the money in the business which is merely a shortsighted and costly thinking.
Let’s look at 10 financial controls that are both scalable and powerful in protecting your enterprise from financial abuses.
- Involve more than one person in any one cycle of money. This is a basic “check and balance.” If two or more people sign off on all money transactions and money cycles reduces the chance of fraud or theft happening.
- Thoroughly verify employees and independent contractor’s backgrounds before you hire them. Validating employment history and talking with past references, confirm that these references are real.
- Try to avoid liquid cash, which reduces temptation.
- Keep minimum balances available in operating accounts and have other monies in a segregated account(s) with tighter financial controls.
- Formally set levels of spending authority for your team in purchasing decisions.
- Clearly define refund and return policies that explain who is and is not authorized to refund; explains which kinds of refunds each has the authority to do.
- Set safeguards for customer credit cards and other financial information of the client.
- Set a formal expensing system.
- Regularly know your business and the key figures so you can easily see what’s normal and what’s abnormal.
- Get the right kind of insurance and bonding coverage.
- Manage expenditures and costs with approved operating budgets.
- Manage client fulfillment with checklists of deliverables and production schedules.
- Monitor client satisfaction with informal interviews and follow-up surveys.
- Set and follow a Master Marketing Calendar
- Generate visual scorecards for key marketing metrics.
- Define and establish a formal approval process
- Have a checklist so that your team follows
- Write a list of negotiating parameters your sales team implement on the field.
- Define and set an approval process for sales exceptions.
- Need standardized sales paperwork and contracts.
- Give sales team sales scripts.
- Sign employment contracts that protect your client list.
- Instruct sales people to use only company provided contact phone numbers, emails, fax numbers, etc. while interacting with clients.
- Provide client access to give feedback directly.
- Save and record accurate sales metrics.
Metrics and Scorecards
A scorecard or a “dashboard,” is a visual way to know how a key area of your business if progressing. Quantitative data gives your entire team a clear, simple, and objective way to measure the performance of the business. Scorecards can flash a yellow or red alert to your team so they can rectify the situation.
Below are the metrics business measures on its scorecards.
- Gross Margin.
- No. of newly acquired leads into business per day, week, or month.
- Cost per lead by lead source
- Average unit of sale.
- Average time to process new orders.
- Return rate by product category.
- Defects parts.
- On-time delivery rate.
- Average no. of days before you actually turn your inventory.
- Actual expenses to budgeted expenses.
You might feel business controls are like formalized business systems, and yes it is! This protects the company and allows, even when you let go of direct control over a process, action, or decision.