A policy is a written set of ideas or plans used to make decisions. No matter what type of business you own, there are lots of workplace policies you should have in place for attendance, security, social media, IT, safety, and more.
Before you make your first sale or hire your first employee, you should have solid financial policies and procedures in place. Every financial policy should help to stabilize the finances of your business.
Having established financial policies and procedures makes sure your entire team is on the same page. Without financial policies, how will you manage your business finances?
Here is a list of financial policies and procedures you should have in place. Make sure all policies are in writing and available to your team. Share these with new employees as part of the onboarding process.
Designate who touches the financial documents of your business and who is responsible for managing those documents.
For example, you might task an office assistant to record petty cash distributions and mail all checks from the accounting department. The owner is designated to approve all invoices and checks and receives unopened bank statements. Clearly outlining who does what helps you avoid misunderstandings and sets expectations for organization.
Who can sign checks for the company? It might be just the owner, but it could also include one or more key employees. Whatever you decide, extend that policy to credit and debit card use as well. Note that any changes to a checking or savings account must go through an approval process.
We’ve all heard stories of the friendly secretary who stole thousands of dollars from her clueless employer. Don’t let that happen to you. When funds come in via cash, check credit card or wire disbursements, determine who receives and how it’s recorded. Devise a system of checks and balances so there’s not one employee working in a vacuum.
Task one person with building, maintaining and securing employee files. Include information regarding who processes payroll, keeps track of sick and vacation days and who ultimately signs the paychecks.
These policies would detail guidelines relating to approval of new vendors and who has access to them. It would also cover payment terms and authorizations along with describing detailed procedures for new vendor setup.
The overall purpose of every financial policy is to ensure that the business finances are enough to keep the business running. A financial policy ensures that resources are used efficiently and effectively and that accounting best practices are followed. Additionally, a transparent financial policy can protect employees from any financial risks that might occur without guidelines in place.
Need some help getting started? Here’s a template your small business can download and print to use as a guide to create your own business financial manual: Business Accounting Policy Manual.