Login or signup
36
LEGAL ISSUES

Writing Off Temptation
 

Advertisement

Without becoming paranoid about your own employees and their relations with customers, it's still important to think aboutwhat protections you have in place to ensure that fraud isn't overly tempting. Many companies, for instance, have only theloosest procedures for handling bad-debt write-offs, which leaves them exposed to collusion between people in their accountingstaffs and delinquent customers.

"Companies should set up formal mechanisms to control the points at which debts are either turned over tocollection agencies or written off," advises Richard Rampell, CEO of Rampell & Rampell, an accounting firm, in WestPalm Beach, Fla. Company CEOs or chief financial officers, he says, ought to be required to give signed approval before eitheraction occurs.

Rampell also recommends that companies set up controls to make sure that all deposits on sales agree with the total payments ofindividual customers, as recorded in accounts-receivable balances. Careful organization, he says, is the best way to make surethat there have been no mistakes or theft.

Last updated: Jan 1, 1995




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Comment and share features
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: