Crisis Management: Money matters

“Jiji, I have a problem” said Roger. Jiji said “ok, what is it?”
“I am in big trouble: I had lost one of my businesses I was managing because the payments have not gone in time.” Roger is into management of businesses. He is very good at communicating and talking to people, showing them businesses they could be interested in and enabling them establish their businesses. He helps in managing their businesses on their behalf of day to day management of repairs and maintenance, procurement of inventory, payment of current liabilities for the businesses. He had an Office Assistant who was very capable for some time and trusted everything on that person. They worked efficiently as a team. Roger used to take care of business in talking, meeting people and communicating and contacting them and his Assistant was helping in taking care of payments and books. Suddenly he found that he was in deep waters as the payments were not being made in time and business dealings were not being enabled because of that. He was in a very crisis situation as those clients did not want them to manage their businesses since they were sent collection and legal notices and had to pay liabilities as a result. This is crisis, but can be worked out, with diligence.
Crisis Management is an important part of business management. What would you do if for some reason you are trusting too much on some one person in your business and to get more business contacts, you participate in marketing and public relations activities? You not only allow the Office Manager/ Secretary/ Accountant all in one person, as yours is a sole proprietorship to take care of business dealings but you give them ability to write checks on your behalf for the company. One fine day, you find that the checks have not been entered in the books, and payments have not gone out in time. The Office Manager/ Secretary/ Accountant all in one person are in fact busy with other things. May be someone in their family needs care or may be that they want to keep busy chatting with their spouse/ mate/ loved ones, may be because they need attention, or simply that priorities have changed and they want to be attentive to something other than office work. What would you do to handle a situation as this, better still, what could you do to avoid this nasty situation ever arise and be protective of your company?

Itemize all the responsibilities that are required and make a weekly checklist of things to do. Regroup activities that you are busy with and involve yourself in the monetary well being of the company. Check your accounts on a day today basis. Watch over your accountant to see if the books are up to date. Make it a point not to allocate the duty of issuing checks to the same person who deposits the money. Take responsibility in sharing the business activities. Make sure you have the back up data of all transactions recorded and also access to all your accounts. Review the progress every day or every week with your Accountant and keep asking questions you need answers, such as who has paid and who have not paid from your clients, what bills are due, and have arrangements made for the payments to go? What is the amount in the bank? What amount is available after the checks have been issued and do the checks overdraft the account in any way? Have all the services been provided to the clients? Have you included the services offered in the invoices to the individual clients? Have the records been updated to reflect the current status of the transactions? If you need to report to your business board about the developments and progress, make sure you have data of open invoices, profit statement, balance sheet prior to the quarter and after the quartet, and if you need to submit human resources data, make sure you report it in time.

Roger hired a different person who could handle things efficiently, attended the board meeting and explained them that he was to blame it also because part of the blame goes to him as he did not pay close attention to the needs of the clients who were trying to reach him, and did not watch the transactions very well. He told them he is back in business as the new bookkeeping already showed evidence of improvement as the bills were entered and invoices being sent in time. Also, the payments are being made in time; the only current liability that is due is payment to himself as he only took half of what he gets paid every month. He is going to be on ninety days probation by accepting only partial payment and making sure that all the business dealings are kept up to date. The board members asked several questions relating to the maintenance of their businesses as well as bookkeeping. Finally, the board decided, it is time to give a try.