A business checking account is an integral part of both daily cash flow and your enterprise's long-term stability. But it's also a point of risk if not handled properly. You risk the theft of funds, loss of control over usage, improper records, and even digital intrusion. To help you maintain just the right management of your vital account, ensure that these four types of people have access to it.
1. The Primary Check Signers.
Obviously, the individuals who will be authorized to signs checks written on the account need to have access to it. The bank or credit union will set this up when the account is created, but you can always change, add, or revoke signing authority later. To protect your funds from theft, embezzlement, and uncontrolled use, keep the number of regular check signers as limited as possible.
2. Someone Who Does Bank Reconciliation.
Reconciliation of bank statements against company records is a vital part of defending your checking account. Someone within the company or in your bookkeeping service should perform this task regularly—monthly if not weekly. Reconciliation ensures that all checks and debts are accounted for, that no erroneous transactions have occurred, that errors are found quickly, and that your books accurately reflect the cash on hand.
3. The Person Overseeing Accounting.
Accounting should always include a system of checks and balances. Someone other than the individuals who do the daily practical accounting tasks should oversee the accounting process as a whole. This person may be a manager, an owner, or a designated employee. They should determine which checks are written, follow up on errors found during bank reconciliation, and perform audits.
4. A Backup Signatory.
While you may have certain individuals within the organization who will sign and authorize checks on a regular basis, you should also have a backup plan. In any organization, there will be a time when the regular signers are all out and checks still need to be written. The backup signatory should be kept informed about the company's cash flow so they can make decisions when the primaries are gone.
One key to good management of any bank account is understanding who needs to have access and who doesn't. The better your business is at this balancing act, the safer your funds and your cash flow will be. Want more ideas about protecting your business checking accounts? Start today by meeting with an account manager at your financial institution.