Who may commit money.
WHY IT MATTERS
Uncontrolled spending is one of the commonest ways money leaves quietly.
WHAT TO ESTABLISH
Who may commit, and to what value What requires a second approval What requires quotations What requires a contract
WHAT A SIMPLE STRUCTURE LOOKS LIKE
- Small amounts: the manager
- Larger amounts: a second approval
- Substantial amounts: the owner, with quotations
WHY THRESHOLDS RATHER THAN APPROVAL FOR EVERYTHING
Approving everything creates delay and nobody reads any of it.
WHAT TO REQUIRE ABOVE A THRESHOLD
Comparative quotations.
WHY
It is the main control against overpaying.
WHAT TO DOCUMENT
The approval, before the commitment.
WHY BEFORE
Retrospective approval is not a control.
WHAT TO SEPARATE
Whoever orders Whoever receives Whoever approves payment
WHY SEPARATION MATTERS
It is the basic control against both error and fraud.
WHAT TO DO IN A VERY SMALL BUSINESS
Separate what you can, and review what you cannot.
WHAT THE OWNER SHOULD REVIEW
Payments made, periodically, against what was ordered.
WHAT TO WATCH FOR
Suppliers nobody recognises Amounts just below approval thresholds Invoices without purchase orders Changes to supplier bank details
WHY THAT LAST ONE
It is the commonest payment fraud there is.
WHAT TO DO ABOUT IT
Verify any change by telephone, to a known number.
