Tales From Bankruptcy Court

Copyright (c) 2008 Aisha Jones Scheffel

I often meet two types of business owners and health practitioners. The first is one that micromanages all the details. They don't hire bookkeepers. They don't hire staff to help them and they have very little time for themselves. The second is the type likes working with patients or customers, and has little time for the business part of their business. They hire people competent or not to help run the business and take care of their finances. As you can tell neither of these are ideal. Under the first example, your business doesn't grow. You never reach the level where you can help a lot of people because all of your time is tied up in minutia, but you feel safe and protected because you are handling it all. Under the second example, you may be helping more people because you have more time, but your bookkeeper could be stealing from you, your employees could be stealing from you, and your business is filled with inefficiencies that hold back your profitability. As usual the situation isn't black or white, it is in the misty gray fog of the situation that you will find the ultimate solution.

Let's look at celebrity stories where business managers and advisors caused some serious financial distress:

In 2000, Dana Giacchetto, advisor to the stars charged with stealing approximately $20 million from stars such as Matt Damon, Ben Affleck, Ben Stiller, and Courtney Cox Arquette, and the rock group Phish.

In 1995, Sting discovered that his advisor had stolen $6MM.

In April 2008, Charleston Heston's business manager was charged with stealing hundreds of thousands of dollars. The business manager allegedly forged signatures to pay off her credit card debt.

And my personal favorite:

Gary Coleman filed for bankruptcy in 1999 and claimed medical bills and financial mismanagement were to blame.

Here are few tips to make sure all your money is going in YOUR pocket:

Immediately stamp checks "For Deposit Only". An unscrupulous employee could take a check and write it over to themselves. Stamping it "For Deposit Only" ensures that the checks can only be deposited. Use and keep duplicate deposit slips. If someone other than you makes bank deposits, this is essential. An dishonest employee could fill out one deposit slip in your presence and then fill out two different slips at the bank. One that goes into your bank account and another that goes into theirs. If you have duplicate deposit slips, you can double check those slips against deposits on the bank statement.

Check references on newly hired employees and bookkeepers. You can ask for references and follow up. You can also get background checks. Here are a few online companies you can use: www.sentrylink.com and www.trudiligence.com. You can get background checks for as little as $20.

Keep your checks locked up. If your bookkeeper gives you a list of bills to be paid then just release the checks that need to be paid.

Never use a signature stamp. If you are a fan of Oprah, she says the best business advice she was given was from Bill Cosby and it was simply "Sign your own checks". There are ways to allow your bookkeeper to pay bills for you, but controls need to be in place. Don't give someone that kind of Carte Blanche.

As you can see a lot of these tips are easy to implement. I think the livelihood of you and your family is more than enough to compensate for the few minutes it would take to implement these strategies. I'm sure you don't want to end up on the front page of the newspaper because your bookkeeper embezzled from you. Or worse yet, the chilling thought that you could be reduced to mall security at a Los Angeles area mall, much like Gary Coleman. So when the bank calls you will never have to say, "What are you talking about Willis?"