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Helping Your Clients Mitigate Organizational & Financial Risks

Jillian Straw
Posted by Jillian Straw on Jul 1, 2022 12:28:30 PM

Your clients specialize in a certain industry. Whether a small retail store, a restaurant franchise or a professional service, your client is an expert in something that makes their business valuable.

However, many companies may excel in some areas, but face challenges in other aspects of business—like accounting, finance, or operations. As an external team, your accounting firm is valuable because you provide accounting and financial expertise, especially in areas of risk mitigation.

Your clients may not be proactive in addressing potential sources of risk, either because they don’t have the expertise or the bandwidth. As a trusted accounting partner, you can take on a proactive role for clients. Not only does this benefit them, but it can also help you position your firm as a helpful consultant.

Mitigating risk for clients can offer a lot of value for your accounting firm—as a business development strategy. To empower your clients, consider how you can leverage your role and expertise in their risk strategy, both for their finances and operations.

Your Firm’s Expertise: Data and Financial Health

Your accounting firm is well-equipped to guide your clients where data and financial health overlap.

Just as your clients have their specialty that is the core of their business, your team’s specialty is financial data and numbers. Your team has been trained on best financial practices, keeping ahead of the curve on technology and software that can be used to improve operations.

Even if your clients are familiar with financial best practices, an outside perspective can help them catch any issues or risks that they’ve overlooked. As an external financial professional, you are positioned to objectively audit business systems and make recommendations.

How You Can Help Your Clients Mitigate Risk

There are many different areas of potential risk in a business. For the back office, Accounts Payable (AP) and invoice processing can present particularly thorny areas of operations. The risk of an audit may also require operational procedures or software that creates a searchable, indexable data trail of invoices and payments. For many businesses, implementing accounting and payment solutions can be a sound strategy for reducing risk.

1. Maintaining Secure Payment Methods

One of the biggest risks with manual AP is using paper checks for payment, which can present many opportunities for error. Paper checks can get lost or delayed in the mail or face forgery issues, all without a complete, auditable trail.

By contrast, using electronic payments for processing invoices can mitigate risk every step of the way. Electronic payments are sent directly, removing the risk of transit. The electronic “bread crumb trail” is also fully visible, so any questions or issues can be resolved transparently.

In addition to the traceability of electronic payments, new tools like virtual cards can add another layer of protection for companies. This payment method leverages a one-time-use number that is generated by the card issuer. It functions like a normal card payment, with a 16-digit controlled payment number, security code, etc. The number is linked to your business bank account, and the charge is posted when the transaction is completed. However, the significant difference is that once it is used for that specific transaction, the number cannot be used again (unless designated for multi-use transactions).

A tool like a virtual card (vCard) can take away a significant area of risk for a company. Even if a fraudster was able to access the vCard number, they couldn't do anything with it once it has been used — preventing fraudulent charges or the need to get a new card. Empowering your clients with knowledge about different forms of payment can help them choose the best path for avoiding risky payments.

2. Minimizing Cash Risks

Because it is difficult to track and trace cash, businesses who use cash in their operations may face a number of different risks. A “petty cash” fund can be helpful for a business that needs flexibility for last minute expenses, but it can also be an opportunity for mistakes or fraud.

You can advise your clients to take a different path, using new tools like corporate debit cards that can remove some of the risks. Secure corporate debit cards can replace a petty cash stash with a more controlled option.

These business cards are tied to your client’s bank account, making it easier for staff to use funds when needed. These cards also have control features that allow companies to manage how funds are spent. As an administrator, your client can designate exact spending limits that are applied instantly to the card. Clients can also take advantage of designated “Merchant Category Codes” (MCC) to specify what kind of retail store the card can be used at.

Together, these control features can help prevent non-business-related purchases, while also documenting staff transactions for any questions at a later time.

3. Building Strong Vendor Relationships

Particularly if your business clients are in an industry like hospitality or retail, they rely on frequent deliveries from vendors and suppliers to maintain inventory. Poor vendor relationships can be a risk for companies, leading to unreliable inventory or products, and other challenges like unfavorable pricing or terms. These relationships need to be dependable for success in operations, making maintaining transparent and healthy vendor communication a priority for many companies.

While there are many factors that can influence your client’s relationships with their vendors, one of the most critical factors is how vendors are paid. When a vendor is consistently paid accurately and on time (or even early), it helps strengthen the relationship.

If your client has historically struggled with making payments on time and without error, this may be an area of risk for their operations. Consider implementing an efficient and effective invoice solution for clients who need to improve vendor relationships.

4. Setting Up Complex Custom Approval Rules

The more complex a company becomes, the more layers there are of management and approvals. While these safeguards are helpful for review of payment information, it can also create a lot of headache for your client (and opportunity for processing hold-ups or errors).

Help enable your clients to maintain control over their spending, with streamlined invoice processing systems that offer custom approval rules. These rules can be set up to match the company’s complexity and unique structure. Modern software solutions can create workflow rules based on any data point—the vendor, department, total, or certain item contents, and including multiple “and” and “or” factors.

With proper custom approval rules, invoice expenses get the appropriate review, allowing the company to keep an eye on expenses.

5. Facilitating Long-Term, Indexed Invoice Data Storage

Company data is an asset for your clients, but to take advantage of it, that data needs to be accessible. Your clients may not proactively think about their long-term data storage, but offering them your expertise in how long they should keep their invoice documents can help ensure they are taking the right steps.

Long-term storage of documents is critical in a couple different ways. First, if a client ever goes through an audit, this data can play a key role in addressing risks (addressed below).

In addition, for more daily needs like reconciling statements or closing out the books, best-in-class invoice solutions will also include helpful tools like easy-to-access invoice images in digital storage. An image of the original document is stored with the data entry, eliminating the need to keep paper on hand but still allowing staff to reference the original and not just the digitized software import. Helping clients set up tools like digital document storage allows them to prepare for the unexpected.

Not only should your clients pay attention to the proper storage of invoice documents with relevant information, but—to mitigate organizational risk—these documents should also be properly indexed. Indexing data as it is stored can open up helpful tools for operations by making large amounts of data searchable. For instance, your accounting team can easily generate helpful reports on everything from historical pricing to inventory usage.

6. Leveraging Increased Accuracy in Centralized Records

Another risk for organizations is data that is inaccurate or inconsistent across different departments. Some companies keep data relatively “siloed” between departments, which can lead to issues as staff work with different numbers and reports.

Helping your clients move their invoice and financial data onto one centralized database, with all digitized information, allows everyone to work off of the same information. From staff working at home, to multi-location managers, to your own accounting staff, this centralized approach can ensure data is consistent even when people aren’t in the same place.

In addition, reliable record-keeping is the foundation of business health. With accuracy, historical data becomes more and more useful over time. You can support your clients by evaluating data, comparing trends year over year, or preparing for internal or external financial evaluations.

7. Ensuring Thorough Compliance

There are many different situations that may require your clients to comply with certain regulations. In the past few years, many companies have taken advantage of opportunities for forgivable or low-interest loans, from the Paycheck Protection Program (PPP) loans to other types of regulated local, state, or federal business relief programs. Other companies may go through franchisor audits, or mergers and acquisitions.

All of these heavily-regulated activities require accurate and organized data tracking. You can help set your clients up for success by ensuring their financial systems are sophisticated enough for complex reviews and audits.

Becoming a Trusted Partner to Your Clients

Helping your clients mitigate company and financial risks can benefit both your clients and your firm. When you are able to empower your clients to bolster their businesses, your firm becomes indispensable. Your value extends beyond that of a mere financial service provider. Positioning yourself as a business consultant can be a strategy for your firm’s long-term development.

If your firm is interested in incorporating AP automation and other financial tools into your client services, Plate IQ can help you transform your AP, invoicing, and payment processes. Plate IQ has you covered when you're ready to take the next step, with integrations that maximize the software you already use, including QuickBooks.

Topics: Modern Bookkeeping


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