A recent article posted in the Houston Chronicle by R.A. Schuetz recently noted that nearly half (44%) of all Americans are hiding hidden credit card or loan debt, checking or savings accounts, or cash in their own home or with other relatives or friends, property, etc. compared to last year’s poll responses. Not surprisingly, when CreditCard.com did the survey of 2,501 Americans, millennials responded with an astounding 57% hiding part of their savings or debt a secret. Not surprising though, is that a third of these respondents feel that this financial infidelity is worse than having an affair.
You have to wonder who may do this, well one of the most prevalent answers is often business owners in my experience who not only fail to conceal vital information from their spouses or their partners, they also choose to not inform their lenders about potential challenges to their “robbing Peter to pay Paul” scenarios. Unfortunately, it usually catches up to them, whether in this life or the next.
Several years ago, I was asked to review the books of several partnership entities where a partner had passed away. Surprisingly, the surviving partner was aware before starting these businesses with his childhood friend, that he was imprisoned for embezzlement for five years, but he thought he had changed. Unfortunately, he didn’t. After reviewing and documenting over $800,000 of mismanaged funds, I was told my services were no longer needed, and I hadn’t still completed going through the entities. Since the person in question had passed and there was no potential recovery, the survivor realized it was pointless to see how ignorant the situation was.
Not all business owners are trying to hide from the situation at hand, or that they’ve made some very bad choices. However, any time you serve in a situation where you could be held financially responsible, it’s unbelievably important to not only be financially savvy, but also never letting your guard down because you could also be held legally liable for any problems that may arise.
Any time someone with a financial risk with your business, whether it’s a bookkeeper, a comptroller, or working in some form or fashion within your accounting department, needs regular criminal and credit background checks. It’s amazing how often this NEVER happens.
*Rubber Signature Stamps
Review your bank accounts online at least weekly, if not more often, and do not EVER use a rubber stamp signature for your checks. A banker once told me that a business owner lost several thousand dollars because their bookkeeper used their stamp signature without authorization, but the bank’s liability was limited because of the stamp.
*Personal Credit Score Reviews
Believe it or not, because you are often asked to personally guarantee loans or lines of credit, review your credit score at least monthly to confirm nothing has been opened without your consent. Your business is your livelihood, and if you have a horrible credit rating because someone has raided your social security number for their own use, it can destroy what you’ve worked years to build up.
These are just a few of the ways that people can destroy what you’ve built your business up to be, and end up bringing about a total distrust in outsiders. However, when you hide these problems from those that are directly affecting, i.e. your spouse, your business partner, your life partner, your business investor, etc. then you become the person they cannot trust and they could have helped not only avert a bigger financial pitfall but help salvage the situation. Secrets always have a way of destroying lives.
Dwayne J. Briscoe