Financial controls

The rules about who can spend, approve and pay. Small businesses usually have none.

What it means

Financial controls include authorisation limits, segregation of duties, bank mandates, purchase orders and reconciliation.

Why it matters

They prevent error and fraud, and their absence is what makes small businesses vulnerable to both. The most common arrangement — one person raises, approves and pays — has no control at all.

What it looks like in practice

The practical minimum: two signatories above a threshold, someone other than the payer reconciling the bank, and a rule that bank detail changes are verified by phone.

What to watch out for

Controls that exist on paper and are bypassed for convenience. And the owner exempting themselves, which is where the largest losses in small businesses occur.

Where to get proper advice

Your accountant can design a proportionate set in an hour.