Implementing Business Control Structures to Keep Track of Your Business Assets

Business control structures are vital to the growth and maintenance of a healthy company. Knowledge, understanding, and implementation of these controls are essential. Each company’s primary considerations include environment, audit, communication, risk, and control activities. Inventory control and asset management, reliable financial reporting, operational efficiency, and compliance with all regulatory and statutory parties are the goals of these control structures. 

Strong internal control measures, like inventory management software, policies and procedures, will help you achieve the above goals. These measures will not wholly avert your risk, but they will reduce it. Control structures should: 

• Safeguard inventory and assets with an inventory system.
• Provide a properly functioning accounting system.
• Pursue timely monitoring of the organization’s operations to result in maximum efficiency.
• Certify that employees are aware of and in compliance with corporate policies.

How do you implement business control structures?

Inventory and assets

Warehouse management should utilize inventory management software to track, manage, and organize. Using an inventory management system is an efficient means of improving your controls and immediately reducing your risk of loss.

Segregate duties to prevent an individual from solely being in charge of business expenditures and assets. Separating the responsibility of requesting, authorizing, verifying, and recording the spending assures checks and balances are in place.

Accounting

There are various accounting controls to consider. It is important to investigate your accounting department’s process and timeline. Ask and determine whether they know what the proper procedures are and are they following these procedures. For example, when do they do the reconciliations, and how do they do them? 

Another accounting point is to make sure you have monthly checkpoints to ensure the records reflect the actual business and allow monitoring of profit and loss.

Operations

Automating manual controls and combining certain functions are cost-effective management tools for operations. In addition, removing unnecessary or duplicated steps provides smoother operations and easier monitoring.

Also, ensure that management receives timely financial data to confirm that the work aligns with business objectives. 

Compliance

Provide education and training to all employees to make sure they understand their position and can execute it fully. This foundational work will save time and money if there are any questions. 

Have a separate compliance officer employed to certify that the company follows all local, state, and federal laws, financial responsibilities, and stockholder or board member obligations. 

Having all policies and procedures documented will help the compliance officer keep up-to-date with easily verifiable records.

Importance of business control structures

Without a clear understanding of what business control structures are and strict implementation of these structures, your company may suffer from unnecessary risks. These internal structures are necessary to ensure that the proper procedures are followed to achieve the goals and objectives laid out for the company. 

To correctly implement controls, you need to be clear on your business objectives. Business objectives will determine what risks are present. With an understanding of potential risks, you can decide which control structures will most benefit your business. For example, in a retail or wholesale business, one objective is to maintain adequate levels of product.

However, there is a risk with manual product receipt and distribution tracking: human error, theft, and fraud are common issues. Utilizing inventory management software within a system that meets your specific business needs is a control structure that reduces that risk and keeps your tangible assets managed. 

Wrap up

It is up to you to take charge of your company’s health by implementing the appropriate business controls structures. In the end, these controls will increase the likelihood of your success.