Are your bank payments authorized?

Ever since you’re taking yourself an accountant or you’re outsourcing accountancy alongside with bank payments, you have to ensure that the cash outflow is authorized. All payments done should be authorized obviously by none other than you, the manager or owner of the company.

Generally speaking, already in medium sized companies, if there’s an accountant (or team of accountants for that matter) there should always be someone else at least reviewing the payments. There are two main reasons for it – to prevent any mistakes and prevent any false payments.

We are all humans and as such, we tend to make mistakes – either with numbers, receiving party etc. The more there are payments, the easier those mistakes are bound to happen. We all do them and there’s nothing wrong in doing them. I have heard from countless accountants that they either really want someone authorizing the payments or if already implemented, they hugely appreciate it.

Another good reason behind implementing this authorization is obviously having control over the cash outflow and identifying if any fraudulent activities happen. As we now, access to money creates temptation and as a result you cannot have too many controls over payments in my opinion.

As I said, if it’s just you, there is no problem, but when you start outsourcing or hire someone to do your accounts, please make sure you know where the money is going to and ensure it’s going to the right place.