Creating a Money-Making Business Plan

In my experience (at least with the small businesses I’ve worked with), a business plan is often considered an “unimportant” waste of time, and many small business owners forego creating one.  The truth, however, is that a Business Plan can be incredibly beneficial for a business.  Not only can a business plan create a “Guide” for a company and its employees, but a good plan can also be taken to the bank in order to try and raise funding for a small business.  It can attract investors as well, and it can help focus a business owner’s vision in order to make the business as profitable as possible.

While there are tons of business plan models on the internet today, I can’t help but want to throw my own cap into the ring as well.  There are the business plans that a lot of general businesses use to satisfy mentors (or spouses), and then there are the types of business plans I’ve worked on, the type that big businesses pay tens of thousands of dollars (and hundreds of thousands) of dollars before they ever so much as sign a rental-lease agreement.

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The difference between a “General” Business Plan and a Business Plan that Makes Money comes down to one very important thing…Research.

When a small business owner includes research into a business plan, they are showing banks and investors that they are not going into a business venture blind.  A well-researched business plan shows forethought, logic, and realistic thinking.

Therefore, to create a business plan that will help raise money, a business should include the following elements in their business plan:

  1. The Mission Statement: In Bookkeeping Money-Saving Tip # 15: The Mission Statement, I discussed the importance of having a Mission Statement.  It is just as important to put that Mission Statement into the Business Plan.  Consider it the “Sales Pitch” of the Business that basically tells an investor the Business’s main goal.
  2. An Introduction:  The introduction is a fairly simple concept.  You create a page or two (or three) about the basic business concept.  What is the business selling?  If there is a location, where will that location be?  Will the business have an inventory  and if yes, where will that inventory be kept?
  3. Demographics:  Demographics are an excellent option to add to a business plan because it exhibits that you know who your ideal, targeted customers are and who they can be.  The demographics can help a business see where they should be focusing their marketing dollars, and how to theme their business to attract those ideal clients instead of creating a business that tries to “attract everyone.”  (Read Paint a Target on Your Customers for more information on how to do your own demographic analysis.)                                                             teamwork 2
  4. Competition Analysis:  You know the expression, “Keep your friends close, but your enemies closer”?  This expression is just as true in business as it is in life.  You should know what your enemies (ie, your competition) are doing in their businesses, because every choice they make could potentially harm or help your own business.  Therefore, creating a section that lists ALL of your local competition, as well as what products they are selling (that you may or may not sell as well) and what prices those products are marked at.  The more you know your competition, the more you will be able to create a business model that grinds theirs into the dust (should that be your wish).  Either way, it shows investors that you have a strategy to stay afloat despite what your competition is doing.
  5. CompassLocation Analysis:  A large majority of businesses draw their customers from within 10 miles of their location…TEN MILES. However, the more unique that business and its products are, the farther distance a customer is willing to travel in order to buy what that business is selling.  On the flip side, the less unique a business and its products are, the smaller the distance a customer is willing to travel to make a purchase.  For example – Disneyland has a very unique product; people are willing to fly from all over the world to experience the unique product that Disneyland offers (and that no one has been able to yet duplicate).  Another example – Souvenir shops.  Souvenir shops all sell the same products, and they all try to rent space where the tourists are.  The end result, tourists have so much choice on what souvenirs to buy and where to buy them, they don’t need to go far from their hotels to get what they want.  (In fact, they often buy from within the hotel).  So, in order to create a competent location analysis, you need to include the demographics and competition within YOUR 10-mile radius.  (You can read more about Location Analysis in my article entitled:  BOOKKEEPING MONEY-SAVING TIP #4: Analyze Your Business Location.)
  6. Marketing Plan: At this point, you should know your competition AND your customers, so you should have a pretty good idea how you can target your marketing campaign directly to your ideal customers.  Let your investors know as well.  Include a section just about marketing.
  7. The Dollars and Cents:  No investor is ever going to invest in a business that looks as if it is going to fold its doors as soon as it opens (unless that business is a non-profit).  Investors want to know that a business is going to make money and that they will recoup their initial deposit.  Therefore, the dollars and cents is one of the most important things to include in the Business Plan.  If the business is already open, then bankers would ask for a “Profit and Loss” Statement, as well as a “Balance Sheet.”  But whether the business is in operation or not, another excellent idea to include is the “Pro Formas” or basic monetary projections.  You can create a Budget and include it Graph line: up and down 1in the dollars and cents section, and you can project from that budget how you plan to make more money (or save money).  Calculate Budgets with Low Income-Expense Projections, Mid Range Income-Expense Projections, and High Income-Expense Projections.  That way, the investors will know that the business will still say afloat even in “Hard Economic Times.”
  8. An Executive Summary: The Executive Summary is basically the bare minimum summary of what the business has created plans to accomplish.  It takes the main points from each section, and presents them in a direct manner.  The Executive Summary is basically your “In Conclusion” statement, however, this summary is going to go at the BEGINNING of your Business Plan.  Most investors never really read past the Executive Summary (unless there is something in the Executive Summary that doesn’t make sense), so in essence, the Executive Summary can be the main section that makes or breaks your business plan’s goal:  to raise capital.   Therefore, make sure your Executive Summary has ALL the main items you want an investor to know, and put it right after your Business Plan’s Introduction.  Consider the rest a guide for the business and backup for the more thorough investors.

While I cannot guarantee that this business plan format will raise capital (after all, there are many other factors that investors take into account besides the business plan), I will say that a well written business plan can tip funding in a business owner’s favor.  You really have nothing to lose by creating a thorough, well-researched business plan – but you do have everything to gain.

How to Make QuickBooks Enter Transactions For You

If you’ve already gotten OUR EBOOK: “How To Do A Year’s Worth Of Bookkeeping In One Day”, then you’ll probably already know how to do this step.  This excerpt is straight from that eBook with only a few modifications for those who haven’t read the book yet.

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Do you have a lot of transactions that repeat from day to day, week to week, month to month in your business?  What about repeating transactions that need to happen once or twice a month?  I’m sure you do.  After all, if you have to pay rent, or make a car payment, then you have a repeating transaction.  But what about invoices or sales receipts?  Do you bill any of your customers the same amount monthly, weekly, daily?  How about deposits?  Do you receive a specific preset amount of money on a timely basis (like an insurance payment, disability, social security, or just a flat fee for services rendered)?  What about vendor bills or credit card entries that are charged to your account every month?

All of these things, no matter how big or small, can be “Memorized” by QuickBooks.  In other words, you can set them up so that QuickBooks does the data entry for you.  It’s really easy.  All you do is set up the transaction as if you are about to enter it, then “Memorize” it.  Once you do, QuickBooks will automatically enter the transaction as a check, bill, invoice, deposit, etc., as soon as the date you preset passes.  Then, when you open QuickBooks after that date, you will be notified that the transaction(s) have been entered.  This one little step can save hundreds and even thousands of minutes in data entry time.

Here’s how to “Memorize” a Transaction in QuickBooks:

  1. Create your transaction, but do NOT press “Okay” / “Enter” / “Save and Close.”  (You can also pull up a transaction you’ve already saved if you don’t want to re-enter the information.)
  2. With the transaction open, Press Ctrl + M.
  3. The screen that pops up should look something like this:
  4. Choose “Enter Automatically”, then the frequency (weekly, monthly, quarterly, etc.) under the “How Often” section.
  5. Choose the next date you want the transaction entered (which is going to be the transaction for the NEXT month – Thus, you would choose February if you are entering January’s transaction).
  6. Choose the number of transactions remaining (which is useful for items such as car payments that are only paid for three years), and the number of days to enter the transaction in advance if you’re going to mail that transaction in the future.
  7. Click “OK” to return to the Original Transaction.
  8. Press Ctrl + Enter to Save That Transaction for THAT MONTH.
  9. That’s it.  The next time that entry needs to be entered, QuickBooks will enter it when you open the program.

Quick Important Note:  Once the transaction is Memorized, you can simply Close and then Reopen QuickBooks and QuickBooks will automatically enter ALL of those transaction from the first entry up to TODAY. That means, if you create an entry for January of 2007, but it’s May of 2010, this transaction will be entered multiple times until all of the transactions have been entered up until today’s date.  What this means for anyone who’s behind on their bookkeeping is that they only need to memorize one of each transaction and amount, then close and open QuickBooks to become instantly up to date.

Now go forth and take advantage of this fabulous tool. It will save you OODLES of time!

Let me know how it works for you.

Diary of a Bad, Bad Bookkeeper: A Warning Sign

Betty Bookkeeper Headshot

Dear Diary,

Betty Bookkeeper HeadshotToday sucked… and I mean, straight up sucked.

There I was, minding my own business, when in walks the boss with a receipt. On the receipt are stamped the letters C.O.D. It was from one of our vendors that apparently hasn’t been paid in so long, they’ve changed our account from credit to C.O.D.

“What is this, Betty?” the boss asked me. “Why has ABC Hardware turned our credit account into a Cash-on-Delivery account? I’ve been with them for five years, and they’re saying we’re three months behind in our payments. I told Bill – the boss over there – that it can’t be right. We’ve never missed a payment with them, but their bookkeeper swears we’re late. What’s going on?”

I looked at him as innocently as I could, and shrugged. “It has to be a mistake, Boss. I’m certain we’re current.”

“Can you call them and fix this, please?”

“Sure. No problem.”

Then, the boss practically tosses the bill at me and storms out of my office.

I picked up the phone line, figuring he’d probably be watching the extension from his office to make sure I called, but I didn’t bother dialing the number right away. I knew the truth – we were behind. I should have made that payment a while ago, but I knew if I sent it, the checking account would go in the hole. Since I wasn’t quite sure how far behind we were, I figured I’d better check.

Typing a few things into the computer, I saw that we were about $1,200 behind. That wasn’t too bad. So I did actually call the bookkeeper over at ABC Hardware. When she got on the phone, I said, “Hey, Jane. How’s it going?”

“Betty,” she said coldly.

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A few choice words ran through my head, but of course I kept them to myself. “Listen, Jane. I just got reamed by my boss about some notice he got from your company. He said you made our account a C.O.D. account. What’s up with that?”

“Well, Betty, you’re company’s late in paying us. And it’s not the first time.”

“Well, Jane… I just mailed a check for $1,200 a couple days ago. Have you checked your mail today?”

“’The check’s in the mail?’ Really, Betty? You’ve used that one before. And then we never got the check. So my boss decided to make your account C.O.D. from now on. Besides, you owe us $3,100 – not $1,200.”

No kidding. “Are you sure about that? I only have invoices for $1,200.”

“I’m sure. In fact, I emailed you and faxed you hard copies of the invoices several times over the last couple months.”

The temptation to hang up on her was irresistible, but I didn’t. “Well, I’m sorry, but I don’t know what happened to the invoices. And I did send you $1,200 just a couple days ago. So, what’s it going to take to forget this whole C.O.D. thing?”

“If you want the account to revert back to a credit account, you need to pay the balance in full immediately. That’s the only way.”

“Okay. I can do that. I’ll put a check in the mail today.”

“No, that’s alright. I’ll come and pick it up.”

Of course you will, you snotty… “Okie dokie. How about five o’ clock? I can have a check for you by then.” And the boss will be gone by four, so he’ll never see the real balance due.

“Fine, see you at five.” Then, she actually hung up on me.

Long story short, I had to scramble and figure out a way to pay $3,100 without letting the boss know what was going on. It took me a bit, but I finally figured out that I could write a balance transfer check from one of the new credit cards I opened in the company’s name…a credit card that goes to the Company P.O. Box the boss doesn’t know about.

I told the boss it was just a misunderstanding, and that Jane actually found our payment in the mail that day…so there should be no problem from now on. The boss went back to thinking I’m a genius, and Jane showed up at 4:45 – Eager twit.

All I have to say now is: Man, that was a close call!

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Why This is a Warning Sign

superhero_edited_no_maskA lot of small business owners don’t realize it, but when a credit account is changed to a C.O.D. account, that’s usually a BIG warning sign that “the business is suffering”. (Notice, I’m NOT saying anyone’s embezzling…this is quite simply a sign that the business needs to handle their finances better, and possibly their cash better as well.) Most vendors that offer credit to their preferred clients are loathe to take that line of credit away if it means they might lose a business as a customer. Usually, the only reason a vendor would change a credit account is if there is a history of serious delinquency or bounced checks. So the minute any vendor demands a COD payment, realize that your company’s credit history is on shaky ground and become proactive.

How to Know for Sure

Should the above scenario happen to your company, don’t go running to your bookkeeper first. Instead, ask the bookkeeper at your vendor’s company to print up a Statement of at least 90 days to 6 months so that you have a record of EXACTLY how your bookkeeper has been paying them. Look it over and take note of how far apart the payments are. Are there any amounts that were subtracted and added back on? (That could be the sign of a bounced check.) Most credit accounts require a minimum of one payment a month, while some require more. Ask the other bookkeeper what the terms are for your company, and THEN approach your bookkeeper.

Before you make any accusations, however, there is one more thing you can do to double check your bookkeeper. When you have the Vendor’s Statement for your company in hand, ask your bookkeeper for the last three bank statements. Also, ask for a “Check Detail” listing all of the checks for the same three months. A good bookkeeper will know exactly where those bank statements are and will be able to give you both documents in less than 10 minutes. (The key is to ask for this information immediately and DO NOT let your bookkeeper put you off ‘til the end of the day…they can cover their tracks if given too much time.) Then, when you have the Vendor Statement, the Check Detail, and the Bank Statements in your hand, do a quick check for the following:

  • Highlight the check numbers listed on your Vendor Statement.
  • Find the corresponding check numbers on your Check Detail printout. From here, you will be able to tell exactly when the check was supposed to have been printed and then mailed. The dates should be a week apart if the vendor is in town…up to 10 days if the vendor. (Of course, the time it takes to cash a check also depends on how big the vendor is.)
  • Now check the bank statements for the same check numbers. Do the dollar amounts actually match, and when were the checks cashed? Sometimes, the other company may hold onto the check for any number of reasons, but it will give you a good idea of how long the check cashing process takes with THAT particular vendor…and how long your bookkeeper may be holding checks.

Your Bookkeeper May Be Embezzling if…

Now, before I tell you exactly what to look for as far as embezzling goes, let me just say one thing. This does NOT 100% mean that your bookkeeper is embezzling. There can be reasons for any discrepancies you find. However, if you do find the following discrepancies, don’t be stupid and sit on your hands either. Ask an accountant or an independent bookkeeping company for help immediately. Make a backup of your bookkeeping program without the bookkeeper’s knowledge, and put that aside…(you may need it later).

And whatever else you do… DO NOT…I repeat… DO NOT confront your bookkeeper with what you find. If your bookkeeper IS an embezzler, the MINUTE you accuse them of anything, they will WIPE their hard drive, and your bookkeeping program, and they will destroy any evidence of embezzlement you may have in your office. Be certain first, and then do a cold hard lockout. The minute you KNOW – without a doubt – that they’re embezzling, DO NOT let them back in the office, and disconnect the bookkeeping computer from the internet. (You don’t want them logging on remotely to destroy your bookkeeping program.)

  • To know if your bookkeeper might be embezzling, look at the Check Run and look at the Bank Statements. Do the check numbers and amounts match? Bookkeepers can always go in and change the check names and amounts later on (which they will do if they want to show the boss an inflated bank balance), but the Bank Statements will give them away every time.
  • Another thing to pay attention to…are the checks being cashed months after they were written? If they are, then your bookkeeper was sitting on them for some reason (probably to make sure they didn’t bounce)…but keep in mind, YOU may have told your bookkeeper to hold those checks. That happens a lot, so don’t make any accusations unless you’re sure you did NOT ask the checks to be held.

Again, this is just a warning sign, but it’s a good sign to look for. Do not ignore it.

 

Diary of a Bad, Bad Bookkeeper (Day 112) – Theft by Signature Stamp

Betty Bookkeeper Headshot

Dear Diary,

Today the boss went on vacation and guess what he gave me…the Signature Stamp.  I couldn’t believe it when he handed it to me.  I think my smile was from ear-to-ear.  Doesn’t he realize how stupid it is to give me the signature stamp?

“Are you sure you want to give this to me?” I asked all innocent like.  In the back of my mind, I was already calculating how much money I might be able to get now that I had this new stamp.

“Of course.  I trust you,” he told me with an amused little smirk.

That smirk told me everything I needed to know.  My question had just convinced him that I was the sweet innocent young lady he had come to know so well.  Because – fool that he was – he sincerely believed that everyone was as open and honest as he was.

I almost felt bad about stealing from him.  Almost.  But then I would remember that I was making less money than everyone else in his company…everyone except the receptionist.

“I don’t know.  That’s a lot of responsibility,” I commented in the best hemming-and-hawing voice I could manage.  “I really don’t want to let you down.”

“It’ll be fine,” he assured me with a light pat on my shoulder.

Then he strolled out of my office.  An hour later, he left the office for good.  He was off to the Caribbean for the next two weeks.

I waited an hour after he left just to make sure he wasn’t coming back.

And then…

Over the next week…

  • I signed some IRS paperwork with that signature stamp.  Whether or not the IRS paperwork is accurate…?  Who cares.  At least it’s filed.
  • I opened a new cell phone account with his signature stamp…got the “Unlimited Text and Talk” package…for my whole family.  My daughter may only be 8, but she loves her pretty new pink cell phone.  And of course, I love my new iPhone.
  • I also got a new Business Gas Card Account.
  • I downloaded a new bank account application from online, signed it with his signature stamp and faxed the paperwork back .  Got instant approval.
  • I sent out several applications to local vendors to get lines of credit.  They all got approved.  I now own a chainsaw from the local hardware store (because I can), an electric lawnmower from Lowes, solar panels for the garden from the local garden supply store, and $300 window blinds from Home Depot.
  • I ordered a bunch of magazine subscriptions in his name and sent them to my house.  (I really love Cosmo.)
  • I walked into Office Depot and paid for a whole bunch of office supplies with a blank company check and his signature…including a new printer for my kids and a portable scanner for… I guess for the “heck of it.”
  • I went to the bank with a check made out to Cash.  (That was an easy $500.)
  • I paid my new car’s DMV bills with his check…and got my husband’s car smogged.
  • I signed a few petitions in his name.  He’s now a Democrat that actively supports breast cancer funding.
  • I also got a PO Box in his name at the local Mailboxes Etc. office.  All that new paperwork will never even come to the office.
  • …And I did a whole bunch of other stuff, although I can’t remember them at the moment.

You know what the best thing is, Diary?  When he comes back, he’ll have no idea what I’ve done.  Most of the paperwork will go to the new PO Box I opened in his name.  And even if he comes back and asks to see the bank statement for the first time ever, he still won’t know what I’ve done.  I can explain away the DMV and car-related bills as “work needed on one of the company vehicles,” the Office Depot check as “supplies we needed” and the Cash check as “Petty Cash” issues that came up.  All the rest…well… there’s just no way he can find out about that stuff.   At least none that I can see.

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How to CATCH this Kind of Theft:

You can’t.

You can’t catch this kind of theft because you’ve given them a free pass to steal from you.  And since your bookkeeper has access to all of your most personal information – social security numbers, DOBs, Tax ID Numbers – you’ve just made it super easy for them to take anything they want in your name.   That means – YOU are responsible LEGALLY for EVERYTHING they’ve done.  The IRS says you owe money, and they have your legal signature on file…then you have to pay it or try to fight it.  It’s your signature. And if you lose, you have to pay penalties and interest on top of the paperwork they’ve filed.

Okay – you CAN catch this kind of theft, but you’ll need a professionals help after the fact to find out what that bad bookkeeper did.  Now you can PREVENT this kind of theft by NOT giving your signature stamp to anyone who has access to your checks, credit cards, or any kind of personal information.  Maybe that person is your office manager or receptionist.  Maybe you can give it to your accountant and make your bookkeeper go to them to get your signature.  Either way, by adding a second person to the mix whenever you go on vacation, thus giving the second person you’re signature stamp, you are taking steps to actively prevent embezzlement while you’re away.

AND REMEMBER – IF YOU EVEN SUSPECT BOOKKEEPING FRAUD, ASK YOUR ACCOUNTANT FOR HELP.  You’re not crazy.

Diary of a Bad, Bad Bookkeeper (Day 40) – Stealing the Boss’s Identity

Betty Bookkeeper Headshot

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I got a new credit card today. Well, technically, I got a new “company credit card” today. When the boss wasn’t around, I went ahead and called his credit card company and told them we had lost his company card and needed a new one. They asked me for all of the usual identifying information – social security number, mother’s maiden name, address, phone, account number, etc. – and of course, I gave the guy on the other end of the line all of that information. I then told him that I wanted to change the password question “because the last bookkeeper got fired, and we need to protect my boss’s identity.”

The guy at the credit card company didn’t even miss a beat – after all, companies get new bookkeepers all the time. “Which question would you like?” the guy asked me. “Do you want a question about your high school, pets, favorite cities…” and on and on and on.

“How about the question about pets,” I answered innocently.

“Okay. What is your pet’s name?” he asked.

I thought really quickly, then answered, “Moron.”

“Excuse me,” the guy on the phone said.

“My pet’s name is Moron,” I repeated sincerely. What I wanted to add was – “and Moron’s my boss” – but I managed to hold my tongue… barely. It was so hard.

“Okay. Moron it is,” the guy said in a serious tone while clicking away at the keys on the other end of the phone.  “Anything else I can help you with?”

“Oh. I almost forgot,” I added. “Our office has moved. The address I gave you was for the old address. The new address and phone number is…” and then I gave him my home address and personal cell number.

Again, I heard clicking on the other end of the line as the poor dupe updated my boss’s “new information.” When he was done, he said, “You should get that credit card in the mail by…”, which turned out was today.

So, I swung by my house and checked the mail during lunch. The card was already there. So I went ahead and treated myself to lunch – on the boss, of course. After all, he doesn’t pay me nearly enough for all the excellent work I do for him. And since the boss never opens the mail – especially that particular credit card bill– what he doesn’t know what hurt him.

I wonder what I’ll buy tomorrow… Maybe some new earrings. I’ve always wanted pearls…

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How to Prevent this Kind of Bookkeeper Theft:

You would not believe how incredibly frustrating it is to call into your credit card company and find out that all of your password information has been changed. Not only can your password info be changed, but some people even go so far as to change the “mother’s maiden name” question. Of course, the simplest way to stop this is to catch it early. You can do so by doing the following:

  • Open your credit card statements, or check your transactions online regularly. If anything seems questionable – no matter how small or large – call the credit card company immediately and ask them how many cards they’ve sent out. You can also verify that your security information is still what you originally created.
  • If they tell you your password information has changed, be sure to throw a high holy conniption fit and demand to speak to an account manager or “their boss.” Get this account closed immediately because whoever has your card can still make purchases even while you’re on the line. They will send you a new credit card with a new credit card number within a matter of days.
  • Get copies of your three credit reports as soon as you possibly can because – quite frankly – if your private information has been changed, there’s nothing to keep them from signing up for more credit cards at vendors you may never even have heard of. But, the good news is that every single one of those stolen cards will show up on your credit reports!, but not always all three of the reports, which is why you should spend the extra money to access all three. (In fact, for $14.95 a month at Transunion, you can actually access those three reports and credit scores for free every month. It may be worth it if you ever find yourself a victim of identity fraud.)
  • If a credit card company calls you and says there is questionable activity on your account, get online immediately and see what they are talking about. If they are contacting you, they are probably seeing something they’ve never seen on your account before. So even if you have your credit card on you, it never hurts to double check whatever charges they’re concerned about.
  • And lastly, make sure you know where ALL cards are at all times. I once had a client who ordered a card for his wife – a card which never arrived. It turned out, someone stole it from his mailbox and was shopping with it in the next town and my client never knew. Luckily, I caught it with the very next credit card statement when I asked for receipts that matched the charges, and we realized immediately what had happened. So even though the thief had managed to steal more than $7,000 in 15 short days, my client was not liable for a penny, especially because he disputed the charges right away. (Which is another good reason to check those statements every month.)

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Click Here to read the Previous Entry: Diary of a Bad, Bad Bookkeeper (Day 30) – The Double Payday Scam

Click Here to Read the Next Entry:  Diary of a Bad, Bad Bookkeeper (Day 55) – The Sister Company Scam


Diary of a Bad, Bad Bookkeeper (Day 30) – The Double Payday Scam

Dear Diary,

Today was payday – the second since I’ve been here.  I figured it was about time to test the Double Payday Scam – to see if my boss would actually catch me.

So, I started the day by doing the Payroll.  Just like two weeks ago, I created and took all of the paychecks to the boss to sign.  He signed them, with only the occasional request to see a corresponding timecard…then he signed mine without question.

I took the checks back to my office and set mine aside.  Then, I printed up another paycheck that I took back to him.

“What’s this?” he asked me, glancing briefly at my double payday.

“It’s a replacement check.  I double-checked my income and realized that I had entered my withholdings incorrectly, and QuickBooks took out too much in taxes.  So I voided the other one and reprinted this one.”

“Okay,” he said, shrugging and then signing my check.

And just like that – Double payday.  If he had asked me to produce the voided check, I would have gone back to my office and voided the first check… but since he didn’t, he’ll never know.  Even if he opens the bank statement (which let’s face it, he probably won’t), he’ll see the extra paycheck and think he’s just looked at the same check twice.

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How to Catch the Double Payday Scam:

All a small business owner has to do to catch the Double Payday Scam is to ask to see the voided check, or to insist that you will void all checks personally.  They can then refile the checks, and you have protected yourself… it’s that simple.

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Click Here to Read the previous entry:  Diary of a Bad, Bad Bookkeeper (Day 14) – The Carnage Begins

Click Here to Read the Next Entry:  Diary of a Bad, Bad Bookkeeper (Day 40) – Stealing the Boss’s Identity

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Diary of a Bad, Bad Bookkeeper – (Day 9) In the Clear

Betty Bookkeeper Headshot

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Dear Diary,

Well, it’s been a little over a week, and I would say I’ve got “the lay of the land.”   Apparently, the Owner wasn’t kidding when he said he’d be out of the office a lot.  I have yet to actually see him in the office for more than an hour a day.  He comes into the office in the morning to give his field guys their daily assignments, then he talks to me for about 10 minutes before he too heads out.  Right before he walks through the door, he stops and talks to the receptionist, telling her to forward all of his important calls and take messages on the less important ones.  Yada yada yada.  Everyday is the same.  (Which bodes well for me.)

Today though was a really good day.  Since the first day I got here, I’ve been the sole person in charge of the mail.  And that mail comes to me unopened.  Today, the bank statement came in.  I’ve been waiting to see if the owner would make an exception when it comes to the bank statement, but he just tosses it on my desk without even looking at it.  That’s a good sign for me.  That means when I start forging checks, he’ll never know.  Any checks that come back, I can shred before he gets them.

Man, I love working for “really busy” Small Business Owners.

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The Importance Behind the Bank Statement:

To many, choosing the person that opens the bank statement is unimportant.  But here’s the General Rule:  He who Opens the Bank Statement First is the One Who Can Steal the Most Without Getting Caught. That means, if it’s the bookkeeper – who has access to the checks – you are BEGGING them to steal from you.  If it’s the receptionist, that receptionist may end up in cahoots with your bookkeeper to steal from you.  But if it’s You-the-Small-Business-Owner, you can catch theft as soon as it happens.  So be smart… open the bank statement first every time.  Even if you don’t look for theft, it’s often enough to dissuade thieves in your company from stealing bank funds.

Diary of a Bad, Bad Bookkeeper – (Day 1) A New Job

Betty Bookkeeper Headshot

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Dear Diary,

I just started my new job today, and it’s perfect.  It’s a small company with only a few employees, most of whom are never in the office – they all work “in the field.”  Also, there’s a receptionist, so I won’t have to be constantly answering the phone (thank goodness for that).  The receptionist is very friendly, and I can tell that she’s looking forward to having another woman in the office.  Most of the other employees are men – all the better for what I have planned.

The interview went well (…of course it always does).  The owner told me that he’s never in the office because he’s a contractor and he always has to be at a job site.  He told me that I would have to “take initiative” and “put out a lot of fires.”  Basically, he wants to not have to deal with customers and vendors too much, and so he expects to handle everything.  Just as long as he’s left out of it.  Idiot.  Still, it will make my job even easier.

I came in this morning and saw the owner just before he left.  He handed me a set of keys for the office and told me where the checkbook was.  He then showed me my office and stayed for a few minutes to chat.  He told me that he had called a few of my references and he was satisfied.  Thank heavens that the law won’t let previous managers give bad references, lest they get sued.  But even if that wasn’t the law, there was no way in hell I was going to put down my ex-boss as a real reference.  Nope – a friend is good enough…

Guess I should get back to work.  Gotta learn the ropes – before I rob them blind.

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Click here to read the next entry:  Diary of a Bad, Bad Bookkeeper – Day 9 (In the Clear)

Diary of a Bad, Bad Bookkeeper: Paypal

Betty Bookkeeper Headshot

Dear Diary,

Betty Bookkeeper HeadshotToday I got an intriguing email.  The email was a confirmation from PayPal.  It said that we had spent $150 on an online order.  Since the company does not have a PayPal account, I knew it was a scam – a Phishing Scam, where some con artist is trying to get access to our account.  When you click on the links in the email, you are taken to a fake PayPal page where you are encouraged to log in and verify the purchase (or deny it), and then the fake website captures your real log in details and the con artist can then empty out your PayPal account.  Any good back office person knows – you never click on links in emails from financial websites (because it’s easy to “cloak” the website links).  You always go directly to the original website and log in there. 

Obviously the PayPal notice was a con…but it got me thinking.  Our company does not have a PayPal account…but we could.  It only takes a few minutes to set up, and then you can make payments from any checking account or credit card account that you link to it. 

So I opened one. 

Then, I went online and made a purchase to Office Depot. 

When I checked the bank balance online, I saw that the payment was debited as a PayPal account to Office Depot.  As far as I’m concerned, the explanation from the bank is simple enough to satisfy the boss.  Now, I don’t need to forge checks unless I really want to. 

Now the only question is…what should I buy

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In this mini story, there are actually two cons I’ve brought up:  The Phishing Scam and The PayPal Weak Link. 

The Phishing Scam is an actual scam where a thief sends a fake email encouraging you to click on the link in the email.  By doing so, they can capture your login information and then clean out your bank accounts.  PayPal Emails are the most common financial cons.  After PayPal, sending emails from banks would be the second most common way con artists get information from their victims.

There are three easy ways to spot these scams: 

  1. Banks and financial institutions have standard, precise emails already created that always use the same verbiage.  Phishing emails, on the other hand, often have misspellings and/or sentences that don’t make sense.  If anything doesn’t seem right with any financial institution’s email, it probably isn’t from your financial institution.   
  2. When you open the email, you will see the “From” address is not necessarily from the financial institution it claims to be from.  Whatever is after the “@” sign is the website address.  Anything in addition to the normal address probably means the email is a scam.  (For example:  …@paypal.fakesite.com or …@fakesite.paypal.alerts.com.)  Both the paypal.fakesite.com and the fakesite.paypal.alerts.com are completely fake because whatever comes before the .com is the site.  That means, these sites would be fakesite.com and alerts.com…not PayPal.com.   
  3. And finally, banks and financial institutions openly encourage customers to NOT click on links from their emails because Phishing Scams are so common.  Instead, they will tell you to go directly to their actual website to log in so that you can verify if the email is from the bank or not (and thus the alert is fake or not). 

Also, it’s common to get emails from banks you don’t even have an account with.  If that happens, obviously you can ignore those…but if you are concerned that an embezzler has opened an account in your name, just print out that email and go down to the bank to see if you have an account or not. 

AND when in doubt – go directly to the source…never click on the links in an email from a Financial Institution. 

As for the second con – The PayPal Weak Link: 

It is very, very easy to open a PayPal account and link it to a checking account…any checking account.  PayPal has a very simple verification process, which means that creating a PayPal account is easy for anyone with access to your checking account information, including your bookkeeper.  From there, it is very easy to steal money because PayPal and the bank account link together in order to create instant money transfers.  Plus, money can be sent to anyone with another PayPal account, and everyone takes PayPal these days (including airlines and other travel agencies), so stealing becomes very easy.

Therefore, to protect yourself from someone linking a PayPal account to YOUR checking account, you need to link it first.  In other words, you need to be the one to create a PayPal account with your checking account.  PayPal only allows a checking account to be linked ONCE, which means no one else can use the checking account information.  Once you have linked it, keep that information to yourself.  There’s no need to share it with your bookkeeper or anyone else because business’s should stick to using Bank Bill Pay and writing checks…Period.  PayPal should only be used by one person…the creator of that account.

Thus, if you don’t have a PayPal account, start one immediately in order to protect your checking account.  If PayPal does NOT let you create a PayPal account, then an embezzler has already linked to your checking account, and you need to consider closing it.  This is one of those huge companies that you just can’t avoid, and you really shouldn’t avoid. 

Diary of a Bad, Bad Bookkeeper – (Day 97) The Shell Company Scam

Betty Bookkeeper Headshot

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Dear Diary,

Another day, another dollar…or at least, another stolen dollar.

Well – I’ve had my own company for about two weeks now and I’ve made a couple thousand dollars skimming off the deposits.  The boss hasn’t noticed.  As far as he’s concerned, all of the invoices are paid, and I’m doing my job incredibly well.  In fact, I just passed the three month trial period, and the boss gave me a $0.50 an hour raise.  When he told me that, I felt like saying, “Really?  A whole $0.50 an hour.  You’re too kind.  Now I can buy that car I need.”  But instead, I didn’t.

Still, I do need a new car.  Fifty cents an hour is only an extra $1,040 per year.  That’s not even going to pay for a cup holder.  My car is breaking down and dying in the most inconvenient places, so I really just want to get a new car.  I don’t really need anything fancy, but the best cars are at least $20,000.  I need to figure out how to get a bigger down payment.  I want to put down at least $5,000, but the way things are going, that’s going to take a couple more weeks.  I have no idea if my car can make it a couple more weeks.

I thought about starting another business, but I don’t really want to pay another $100 or so for the licenses…plus, the time it takes to go to the bank and get another account…I’d rather not.

But I did come up with another idea.  I wrote a check to Johnson Hauling for $1,500.

“What’s this check for,” the boss asked me when I gave it to him to sign.  I had been hoping he wouldn’t notice it, since I slipped it in with a bunch of other checks.  But since he had…

“That’s a new vendor we’re using,” I told him.  “We needed to haul away a bunch of left over trash and remnants from the newest renovation project, and they were the best deal.  They delivered a trash can to the project, then hauled it away when they were done.”

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In case I didn’t mention it, the company I work for buys, renovates and sells houses.  So paying $1,500 to haul away remnants was not that uncommon.

“Okay,” he said, distracted as he signed the next check, and then the next.  Finally, he handed me the pile of checks and gave me a dismissive wave of his hand.

I left the office triumphant.  The truth was, I didn’t need to create another company because Johnson Hauling is my husband’s company.  The check that he had just written, I was able to cash at the bank because I’m a signer on the Johnson Hauling bank account.  My husband will never know that I got this money because I can just cash the check.  And the boss has never met my husband, so he has no idea that my husband and I have different last names.  The result… I am now $1,500 closer to buying my new car.

I think I’ll go test drive a Toyota Prius.  It’s a very energy efficient car.  After all, it’s my moral duty to save the planet.

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A Little More Information About This Kind of Scam:

This scam is commonly referred to as a shell company scam because the embezzler is paying a valid company for services that were never rendered or products that were never delivered.  Thus, the company is solid with a banking history while the transaction is nothing but air.  Any teller will cash that check without qualms and hand over the money to whomever’s name is on the account.

This scam is also often pulled when a payment is made to an individual or an employee.  The embezzler’s excuse might be that this person was just a subcontractor for the day and was paid under the table.  Many times, the embezzler will even go so far as to pay someone they are friends with, and then let the friend take a portion of the embezzled funds.  They can steal for a long time this way without getting caught, especially because the owner gets used to seeing that name.

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To Stop This Scam:

It’s important to do your homework.  If you don’t recognize the name of a company, or know anything about the transaction that took place, then ask questions – lots of questions. Ask who ordered the product or services.  Whoever requested the order – sometimes it might be another employee – it’s important to ask them why they placed that order.  Ask to see a Purchase Order, Shipping Receipt, or an Invoice from the company.  Go and look at the service that was done or the product that was delivered.  Talk to someone at the company for which the check is written too and make sure that they actually delivered the product or service.  A good rule of thumb is this… If the payment is for a new account – whether a vendor, employee, subcontractor, or customer – demand proof.  Make contact, or ask for paperwork.

Warning Signs:

  • If someone is colluding with the embezzler to steal from you, they may look you straight in the eye and lie about what they’ve done for your company.  That’s why it’s important to go with your gut when you meet someone.  If you don’t like them, “fire them.”
  • Also, if you ask for paperwork and it doesn’t have an address or phone number, be suspicious.  Valid companies automatically put their contact information on all their paperwork because they want to make sure they get paid – and if you can’t call them with questions, you won’t be paying.  So, ask for the invoice or statement, and be very, very slow at paying anyone you’re suspicious of.  Let them call you and demand payment when in doubt.