Another great week has slipped by. This is a new opportunity for our weekly posts and consideration of some pertinent enterprise or business management issues. I candidly do hope that our weekly posts are adding value to practicing entrepreneurs, budding entrepreneurs, entrepreneurship scholars and all other stakeholders.

Now, let us consider ‘internal controls’ today. This is a common phrase in enterprise management, and of course many people know what it is and what it entails. However, some do not.  For this reason, I will start by defining internal controls briefly. Internal controls are simply all those rules, limitations, guidelines (generally called controls), whether physically, financially, administrative etc that an enterprise puts in place in order to meet business objectives, ensure effective and efficient business operation, protect business resources, and ensure that staffs adhere to business policies and guidelines. Very easy, isn’t it? Again, as I sometimes say, you can go academic with these definitions – but please let us agree not to confuse people anyhow. For goodness sake, not everybody understands and likes complex business lingo. Isn’t this true?

As an example, you might decide that payments above Euros 1,000 (you can pardon me if you don’t like the EU) must be approved by the MD/CEO before cash is disbursed. By the way, the limits also depend on the size of business or enterprise we are talking about. The above limit might be just petty cash in your business, and you might only consider Euros 10,000 and above as an MD/CEO. This is an example of a financial control. I certainly don’t think you have time to approve even purchase of biscuits or tea packs for office use. But if you like it as an MD – you can go ahead. No comments! You might again decide that no staff accesses the office beyond normal working hours – and this is an example of an administrative control.

You might decide to have a reception for your business, where all business matters are first logged before being forwarded to different respective officers. This makes a lot of sense, don’t you think so? It creates some sense of order and this should improve effectiveness and efficiency of the business. You can just imagine a situation where each one of your 40+ staffs get business and proceed to organize execution without control. In fact, the name of your business might easily change to Chaos Ltd – because there can be so much confusion that the business simply becomes disaster. I think those are enough examples. Now you should be able to enumerate some controls for your enterprise – in the areas of finance, administration, marketing etc. Right?

Back to what I want to consider in this article now. What are the key issues an entrepreneur must know and consider regarding internal controls in the business? You might have your points – but allow me to say the following.

  • You should appreciate internal controls, understand them and implement them wisely in the positive interest of your enterprise. I have sometimes met entrepreneurs who place no care on controls completely, only to surface before a business adviser or consultant after they have taken a hit (read loss). And a big one for that matter. Controls might not be aimed at getting thieving employees red-handed, but they do protect business resources in various ways. Imagine a situation where you handle hard cash in hundreds of millions (I leave you to guess some currencies that make sense here), and one staff just decides to disappear with the cash. Possibly you might remember that cheques are useful. Don’t you think so? Or alternatively a manager that signs a contract worth USD 2m without proper costing and evaluation – and you realise that you are losing USD 1m in that deal. Mr. Entrepreneur, try and be smart! Do you agree with me?
  • The benefits of internal controls are countless. There are literally hundreds of benefits of well-planned and implemented internal controls.  Though the aims are narrowed down to principally four issues, namely protection of business resources; ensuring compliance to enterprise policies and guidelines; ensuring efficient and effective business operation; and meeting enterprise goals and objectives, these various areas have numerous benefits that accrue from controls. I simply can’t enumerate them all. Some piece of wisdom here, find time and take a look at the big businesses today that operate globally. For sure they have controls and controls. They might be annoying and irritating sometimes, for example having a problem that needs resolution in Kenya and you are referred to one call center in whichever distant part of the world, possibly Asia. Sometimes these controls become so hopelessly complex that the business suffers very much. Ever heard about the elephant and the flea story in business? If not you better get access and make your own assessment. Nevertheless, these controls make those business giants what they are.
  • The disadvantages of wrongly implemented controls. By the way, there are people and enterprises that oftentimes wrongly understand and implement controls, and eventually controls become detrimental and destructive to their business. A very simple example is this, where you dictate that no vehicle must leave company premises without the Controller approving, even a medical or security emergency might be hindered by this rule because everybody operates like a robot in the enterprise, and no one wants to challenge the authorities that be. Can you guess the possible results of mismanaging such emergencies? Wrong procurement controls might result in wrong procurement and waste of time and money. Complex staff recruitment controls may make the process take ages while critical functional gaps exist due to abrupt staff exits. Now, I leave this to you.
  • The business environment should encourage operation of internal controls. Are you an entrepreneur who implements controls that technically cannot operate in the business environment in which you are? Do you insist that all cheques must be signed by yourself when you know that you are routinely mobile and not easily accessible? Do you want imports to be completed in three weeks in a remote part of the world where import transactions take ages to close? Are you going to blame your staffs for not obeying the rules? Can’t you think and make better use of your controls? Is your enterprise environment encouraging to operation of internal controls?
  • Look beyond the controls. For a word of caution, you need to look beyond the controls – I’m not saying override them at will – and consider other bigger enterprise operational issues that might suffer setbacks by your controls. There is much more to a business than internal controls anyway, and if you have been practicing business for some years I guess you will agree with me on this one. Sometimes controls are expressed in absolute numbers but the enterprise, the market you are in, the demand you are meeting etc focuses on value addition and customer delight –not just your numbers you always brag about. Do you understand what I mean?
  • Periodically review and modify your control guidelines. You should also be aware that keeping the same controls indefinitely without reconsideration and modification, is like putting on the same pair of shoes even when you are growing daily? I wonder whether you have ever had that experience of trying to put on undersized shoes – whether in a real genuine situation or just out of curiosity and possibly for fun. Mr. Entrepreneur, never get so static and live in the past! Even under normal business growth, internal controls need review say every two to three years. For fast growing enterprises you might need to do this more frequently, otherwise you go the way of dinosaurs. Don’t blame your business failure on internal controls, or rain complaints to your staffs because things have gone wrong as your enterprise is using stone-age controls not befitting modern and dynamic business. OK?

Candidly, this has been a long one today – and I do hope you were not about to run away from the article due to its length. Thanks a great deal for your time and patience.

With all goodwill – and best wishes,

Till then,

The Wise Entrepreneur

Comments

comments

45 Comments

  1. Interesting blog post. The things i would like to contribute is that laptop or computer memory has to be purchased when your computer is unable to cope with what you do by using it. One can set up two RAM boards containing 1GB each, as an illustration, but not one of 1GB and one of 2GB. One should look for the car maker’s documentation for the PC to make certain what type of memory space is required.

  2. dmca says:

    Wow! This could be one particular of the most useful blogs We’ve ever arrive across on this subject. Actually Fantastic. I’m also a specialist in this topic therefore I can understand your effort.

  3. Usually I don’t learn post on blogs, however I would like to say that this write-up very compelled me to try and do it! Your writing taste has been amazed me. Thank you, quite great post.

  4. I think other site proprietors should take this web site as an model, very clean and great user friendly style and design, as well as the content. You’re an expert in this topic!

  5. yeezy says:

    After I initially commented I clicked the -Notify me when new comments are added- checkbox and now every time a comment is added I get 4 emails with the identical comment. Is there any manner you can remove me from that service? Thanks!

  6. hermes belt says:

    That is the fitting weblog for anyone who needs to seek out out about this topic. You understand so much its almost arduous to argue with you (not that I truly would need匟aHa). You positively put a new spin on a subject thats been written about for years. Great stuff, simply great!

  7. It is truly a great and useful piece of info. I am satisfied that you shared this useful information with us. Please keep us informed like this. Thank you for sharing.

  8. Keep working ,fantastic job!

  9. Its like you read my mind! You appear to know so much about this, like you wrote the book in it or something. I think that you could do with a few pics to drive the message home a bit, but instead of that, this is fantastic blog. An excellent read. I will definitely be back.

  10. Solicitor says:

    I do believe all the ideas you’ve offered in your post. They are really convincing and can definitely work. Nonetheless, the posts are too brief for beginners. Could you please lengthen them a little from next time? Thanks for the post.

  11. I like the valuable info you provide in your articles. I will bookmark your weblog and check again here regularly. I am quite sure I’ll learn many new stuff right here! Good luck for the next!

  12. I would like to thank you for the efforts you’ve put in writing this site. I am hoping the same high-grade web site post from you in the upcoming as well. In fact your creative writing abilities has encouraged me to get my own website now. Actually the blogging is spreading its wings rapidly. Your write up is a good example of it.

  13. Enjoyed reading through this, very good stuff, thankyou . “Management is nothing more than motivating other people.” by Lee Iacocca.

  14. Shopping says:

    magnificent points altogether, you simply won a logo new reader. What might you suggest about your submit that you just made a few days in the past? Any positive?

  15. I like the efforts you have put in this, regards for all the great blog posts.

  16. I really enjoy looking at on this website , it has great content . “The secret of eternal youth is arrested development.” by Alice Roosevelt Longworth.

  17. I just want to tell you that I am newbie to weblog and really savored you’re page. More than likely I’m likely to bookmark your blog . You really have fantastic well written articles. Bless you for sharing with us your web site.

  18. I intended to put you one little bit of word to be able to say thanks as before for your personal exceptional information you have featured on this website. It has been certainly pretty open-handed with you giving without restraint what exactly most people would’ve offered for an ebook to help with making some profit for their own end, precisely considering that you could have tried it if you wanted. Those ideas also worked to become a easy way to comprehend someone else have the identical passion just as my personal own to find out significantly more in respect of this problem. I am certain there are lots of more fun opportunities ahead for individuals that start reading your blog.

  19. Hey! I just would like to give an enormous thumbs up for the great data you could have right here on this post. I will probably be coming again to your blog for more soon.

  20. I was very pleased to seek out this internet-site.I wanted to thanks on your time for this wonderful read!! I positively enjoying each little bit of it and I’ve you bookmarked to take a look at new stuff you blog post.

  21. I together with my guys have been looking at the nice information found on your web page then all of a sudden I got a terrible suspicion I had not thanked the web blog owner for those secrets. These young men were definitely consequently joyful to see all of them and now have clearly been using these things. Thank you for getting quite kind and for deciding on some incredible subjects millions of individuals are really wanting to be aware of. My very own honest regret for not saying thanks to earlier.

  22. I am also writing to make you be aware of what a nice experience my wife’s princess developed reading through the blog. She learned such a lot of pieces, which included what it is like to have an excellent helping style to make many people easily master specific advanced subject matter. You really exceeded our expectations. Thank you for rendering the priceless, trusted, edifying and cool tips on the topic to Tanya.

  23. nike polo says:

    I wanted to post you the bit of observation to be able to say thank you once again for these precious suggestions you’ve provided here. It is so shockingly open-handed with you to convey unhampered precisely what a few individuals might have offered for sale as an ebook to make some dough for themselves, certainly given that you could possibly have tried it if you ever wanted. These things additionally acted as a good way to fully grasp other people have similar desire just as mine to realize a little more when considering this problem. I know there are numerous more pleasurable occasions up front for individuals who discover your site.

  24. I precisely wished to appreciate you once again. I do not know the things I might have undertaken in the absence of the techniques shared by you relating to that topic. It was actually a real distressing crisis in my view, nevertheless seeing a specialised form you handled that took me to weep with gladness. I’m happy for the work as well as believe you comprehend what an amazing job you have been getting into training the rest by way of a blog. Most probably you haven’t got to know any of us.

    • Clayton W. L. Mwaka says:

      It’s nice to know that this blog is useful to people like you. Welcome, and kind regards.

  25. You have noted very interesting points ! ps decent internet site . “Never take the advice of someone who has not had your kind of trouble.” by Sydney J. Harris.

  26. hermes belt says:

    A lot of thanks for each of your efforts on this site. Kim takes pleasure in conducting research and it’s really easy to understand why. All of us hear all relating to the lively form you render insightful guidelines on your website and boost response from visitors on this idea so our own princess is actually being taught so much. Have fun with the rest of the year. You’re the one performing a tremendous job.

  27. I simply needed to say thanks all over again. I’m not certain the things I would’ve tried without the tricks contributed by you regarding such area. This was a very hard difficulty in my view, however , coming across a new expert way you handled it forced me to weep for delight. I am just grateful for the support and then hope that you really know what an amazing job you were accomplishing training people today by way of your site. I’m certain you haven’t encountered any of us.

  28. I enjoy you because of all of your work on this web site. Kate delights in engaging in investigation and it’s really simple to grasp why. All of us hear all regarding the compelling tactic you render sensible techniques on the website and even recommend participation from visitors on that concept then our favorite simple princess is in fact starting to learn a whole lot. Have fun with the remaining portion of the new year. You are always conducting a great job.

  29. air jordan says:

    Needed to post you one little remark in order to say thanks over again relating to the awesome strategies you’ve featured here. This is simply extremely generous of people like you to present freely exactly what a few individuals would’ve supplied for an ebook in order to make some cash for themselves, precisely considering the fact that you might have tried it if you wanted. Those tricks additionally acted to become a good way to realize that many people have the identical eagerness much like mine to know way more when it comes to this condition. I’m certain there are many more fun periods in the future for many who read carefully your website.

  30. I needed to put you one very little remark so as to say thank you as before for those striking solutions you’ve featured on this site. It has been certainly wonderfully generous of people like you to provide without restraint all that many of us would’ve marketed for an e book to get some bucks on their own, primarily since you could possibly have tried it if you ever considered necessary. These tricks additionally served as a great way to realize that other people online have a similar eagerness similar to my very own to learn more with regard to this issue. I am certain there are lots of more enjoyable periods up front for many who take a look at your blog.

  31. harden shoes says:

    My wife and i got quite delighted Michael managed to conclude his preliminary research through the ideas he acquired while using the web pages. It is now and again perplexing just to find yourself giving away concepts other folks may have been making money from. And we also fully understand we have the writer to thank for that. These illustrations you have made, the easy site menu, the friendships your site make it easier to engender – it is all fantastic, and it is assisting our son in addition to us reckon that that situation is enjoyable, which is extraordinarily fundamental. Thank you for the whole thing!

  32. Good post. I be taught something tougher on completely different blogs everyday. It is going to all the time be stimulating to read content material from different writers and apply a bit one thing from their store. I抎 want to use some with the content material on my weblog whether you don抰 mind. Natually I抣l provide you with a link on your internet blog. Thanks for sharing.

  33. I precisely had to say thanks again. I do not know the things I might have created in the absence of the entire hints revealed by you directly on such topic. This was a real horrifying scenario in my view, however , being able to view the very specialized manner you handled the issue made me to cry with contentment. I’m happier for your service and as well , believe you really know what a powerful job you are always getting into educating the others using your web page. Most probably you have never met all of us.

  34. I have to express appreciation to this writer just for rescuing me from this particular difficulty. Because of browsing throughout the internet and seeing proposals which are not beneficial, I believed my life was well over. Being alive without the strategies to the difficulties you’ve sorted out as a result of your entire review is a crucial case, and those which may have adversely damaged my career if I had not discovered your web page. Your natural talent and kindness in playing with almost everything was useful. I’m not sure what I would’ve done if I had not come across such a subject like this. I am able to at this moment relish my future. Thanks a lot very much for this specialized and results-oriented guide. I will not think twice to recommend your site to any individual who will need recommendations about this area.

  35. yeezy boost says:

    It’s best to participate in a contest for probably the greatest blogs on the web. I will advocate this site!

  36. Aw, this was a very nice post. In thought I want to put in writing like this additionally ?taking time and actual effort to make a very good article?but what can I say?I procrastinate alot and certainly not seem to get something done.

  37. I抦 impressed, I must say. Actually not often do I encounter a weblog that抯 each educative and entertaining, and let me let you know, you may have hit the nail on the head. Your idea is excellent; the problem is one thing that not enough people are talking intelligently about. I’m very happy that I stumbled throughout this in my search for something regarding this.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Share