Do you have a bookkeeper, business manager or financial manager that handles the financial record keeping, bill payment, invoicing, payroll, travel and expense reimbursements, point of sale payments, bank deposits, and all manner of other day to day money-related tasks?

Do you know all that this person does, and have all of their passwords so if they leave your company, you can direct the next person who steps in?

If the answer to the second question is ‘NO!’ the solution is to create a standard operating procedures (SOP) manual with all your accounting and financial policies and procedures documented (Financial P&Ps). 

It may not seem inconsequential for a small business to have one. But according to an article by Scott Beaver at, “lack of or inadequate internal controls can prove devastating to a small business’ financial well-being — and perhaps its ability to remain in business. Lost assets may be hard to replace. Unscrupulous employees can hurt morale and customer relationships. An accounting mistake can lead to poor decision-making.”

A financial P&Ps document doesn’t have to be particularly long or over complicated, but it should:
  • Provide clear guidelines and instructions for how to manage money, consistently record financial transactions and maintain financial documents
  • Define who is responsible for each task, who has access to accounting and financial systems, and who has authority to sign financial documents and make decisions
  • Reduce or eliminate fraud, theft and embezzlement especially around activities like cash management, banking & payroll – and promote responsible behavior
  • Ensure compliance to applicable laws, accounting standards, tax regulations, and industry-specific guidelines
  • Instill confidence and increase credibility amongst external stakeholders (e.g. auditors, investors, lenders) because you have controls in place to ensure financial integrity
Here are five key policies that small businesses should consider implementing:
  1. A Financial Record-Keeping Policy outlines the steps for maintaining accurate and up-to-date financial records. This includes ensuring transactions are recorded in an accounting software according to accounting standards and maintaining financial documents.
  2. An Expense Reimbursement Policy: Outline the process for reimbursing employees for business-related expenses. Define the types of expenses that are eligible for reimbursement, the required documentation, and the approval process.
  3. A Cash Management Policy provides guidelines for handling cash transactions, including procedures for cash receipts, cash disbursements, and cash reconciliation. This policy should address segregation of duties around the withdrawal, deposit and recording of cash, secure storage of cash, and regular cash counts at point of sale systems.
  4. A Time Tracking Policy for service based businesses establishes guidelines for accurately recording and tracking employee working hours and non billable hours. This ensures work productivity, employee wellness and billing accuracy.
  5. An Inventory Management Policy for a product-based business provides guidelines for efficiently managing inventory levels, tracking, ordering, and storing items. The policy ensures accountability amongst every person involved in this process.

Customize the policies and procedures to your specific business needs, industry requirements, and applicable laws. If you need support creating your business Financial Rules of Engagement, consult with us at FinCore. 

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Tricia Taitt is the CEO and Chief Financial Choreographer of FinCore. She holds an M.B.A from The Fuqua School of Business of Duke University, and a BS in Economics with a Finance concentration from The Wharton School at the University of Pennsylvania. For over 20 years, she’s been a finance professional. Half of the time was spent working on Wall Street while the other half was spent in the trenches side by side with small business owners. As a result of working with FinCore, clients have been able to take control of their numbers and feel more confident in their ability to make decisions, while increasing profits by 10% and building a cash stash to invest in growth. Follow Tricia on LinkedIn and Instagram.