Internal controls for small businesses: simple rules that prevent big losses

Internal controls are the rules that make sure money is spent as intended and recorded correctly. Small businesses need them as much as large ones.

Five controls to start with

1. 1Separate duties. The person who approves a payment shouldn't be the one who makes it and records it.
2. 2Two approvals for large payments. Set a limit above which two people must approve.
3. 3The owner reviews the bank statement every month — not just the summary.
4. 4Purchase orders for significant purchases, matched to the delivery note and invoice before payment.
5. 5Restricted access to the accounting system, bank portals and cash.

When the team is very small

If you can't separate duties, add owner review instead: monthly review of payments, payroll and new suppliers.

Signs controls are weak

• Payments without supporting invoices.
• Frequent manual adjustments in the books.
• One person who never takes leave and handles everything financial.

Our internal audit service reviews these controls and gives practical recommendations.