7.5 minutes a week can save your company

By ThePayrollFactory
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If you are letting your staff pay themselves and  handle all pay raises, as well as handle all bonuses for your company for years on end they are going to overpay themselves and possibly others.

The business owner must review payroll data periodically but on a per pay basis would be preferable. To review payroll doesn’t mean run the math on the gross to net , to verify health insurance deductions, and verify 401k percentages. To review the payroll means to look at the gross number and to look at the net number. If your staff person is to be paid a $52,000 annualized salary and your company runs weekly payroll then the employee’s pay is a $1,000 a week before taxes are taken out of their pay. 

I reviewed a business’ payroll years ago and I was told by the owner of that company that  the office manager was paid an annualized salary of  $40,000. As I flipped through each payroll I saw that the office manager’s  gross pay was averaging over a $1,000 a week and I knew the owner wasn’t paying attention to anything.

Once this was discovered the owner took payroll processing duties away from the office manager and hired a different person to do payroll. A few months later I saw that business owner  and asked how things were going. The answer surprised me. I was told that things got worse after I left. I asked how could things have gotten any worse. The business owner explained that after starting to review his finances that the office manager and one other employee had opened corporate bank accounts that the owner was not aware of. The two employees were depositing receivable checks into a bank account that they controlled.  The owner said that business clients were paying the company but the company wasn’t getting the money.

The real sad part of the story is that the owner taught the employee that it was okay to steal. The owner would share cash payments with the office manager instead of putting the cash into the bank. This taught the office manager that stealing was okay. The office manager then turned around and stole from the owner. And it may have cost the owner the company.

All of this could have been prevented in less than half an hour of review time each month. Review the payroll, gross and net numbers. Review the bank statement and review the billing. The owner doesn’t have to do the billing, the bank reconciliation or the payroll but must review it.

Allen R Noll, CPA, President

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