When Your Right-Hand Isn’t Perfect: Why Your Small Business Still Needs Internal Controls
You started your business on trust. You hired a manager (say, an Operations Manager) because you needed someone you could lean on. But trust alone isn’t enough.
One of our clients recently made the difficult decision to close—not because their business model failed, or because someone acted with malice—but because their operations manager was quietly overordering thousands of dollars in parts. Not in a plot to steal, but simply by human error. The owner only discovered the leak too late to stop the damage.
That kind of risk doesn’t require a large company or bad intentions. Without internal controls, even well-meaning team members can drift into mistakes, overspending, or unintentional overuse of resources. The trick is striking a balance: you don’t need to micromanage every single transaction, but you absolutely do need systems that allow you to monitor, detect, and prevent significant leaks before they get out of hand.
What Are Internal Controls—and Why Your Business Needs Them
An internal control is a process, policy, or procedure set up to protect your assets, ensure accurate records, and minimize the chance of misuse or error. Though big companies often get credit for formal control systems, small businesses are even more vulnerable precisely because they lack multiple layers of oversight.
Without controls, mismatches go unnoticed, vendor orders creep higher than budgets allow, and financial reporting becomes unreliable. Strong internal controls also support better operational efficiency, accountability, and decision-making.
According to experts, small businesses often suffer more from weak or overridden controls than large ones. The Association of Certified Fraud Examiners (ACFE) reports that many fraud or financial loss events in small firms stem from weak controls or control overrides.
Given the case above, your business needs control mechanisms that catch error before it becomes catastrophic.
Internal Controls You Can Start Using Today
You don’t have to build a corporate fortress. Here are practical control ideas you can implement now to protect your bottom line:
Segregation of Duties: Split functions so no one person orders, receives, and pays. Why It Helps: Prevents a single person from hiding errors or overages.
Purchase Approval Workflow: Require approval for purchases above a threshold. Why It Helps: Reduces unauthorized or excessive orders.
Inventory & Part Receipt Checks: Match ordered vs delivered; count physical inventory. Why It Helps: Detects phantom or over orders.
Surprise / Periodic Audits: Unannounced checks of orders, receipts, expense reports. Why It Helps: Encourages accuracy when staff know checks may occur.
Require Supporting Documentation: Quotes, invoices, approval records required for every order. Why It Helps: Creates a traceable paper trail.
Independent Reconciliation: Someone not involved in ordering performs monthly vendor/account reconciliation. Why It Helps: Independent eyes are more likely to spot discrepancies.
Access Controls & Permissions: Limit who can place orders or add vendors. Why It Helps: Reduces risk of rogue transactions.
Vendor & Invoice Review: Regularly validate vendors, contacts, invoice legitimacy. Why It Helps: Helps prevent fake or duplicate vendor schemes.
These controls are not about distrust—they’re about creating a system that supports growth and accountability. Even basic, consistently applied controls can stop leaks that add up to thousands.
How A & L Bookkeeping Helps You Build Controls That Work
You don’t have to go it alone. Here’s how we support you:
Custom control design — tailored to your business model (parts, inventory, vendor orders)
Policy documentation & training — we help you write procedures and train your team so everyone understands expectations
Spot checks & audits — we’ll test controls early to see if they hold up
Reconciliation support — we help you run vendor account reviews, parts-to-use matching, and orders vs actuals
Ongoing coaching — we adapt your controls over time, adding new safeguards as your business grows
With us, you won’t become paranoid—you’ll become protected.
Trust Needs Structure
Trust is essential, but trusting without systems is a risk. You don’t need to micromanage every invoice—but your business, and your future, depends on putting guardrails around operations so mistakes don’t become disasters.
If you want me to review your operations, identify risk zones, and map internal control recommendations tailored to your business (whether a shop, parts business, or racing team), let’s talk. Let’s make your business resilient, not fragile.