If you’re even thinking about fudging a number to keep your business afloat, you should think again. Here’s why you’ll get caught.
How far would you go to save your business? If you’ve spent any time thinking about this question, you’ve likely formulated an answer along the lines of “I’d go as far up to the line as possible, but I wouldn’t cross it.” Crossing the proverbial line means doing something you know is dishonest, unethical or even illegal. Yet if you ask many business owners who have been convicted of accounting-related fraud how they answered this question before getting into trouble, they claim their answer would have been no different. Many still don’t understand how they went from law-abiding citizen to convicted criminal. While each case is different, they do share something in common: that first step.
Common Accounting Tricks That Could Land You in Jail
Operating Under Pressure
At some point during its lifecycle, it’s likely your business will face a finance-related crisis that it may not be equipped to survive. These situations usually involve being approved for a line of credit, a bank loan, investment from venture capitalists or winning a cash-rich contract from a new client. Your business may be starved for cash, your personal finances may be pushed to the limit and you absolutely need to close the deal to survive.
Securing one of these prizes usually requires an evaluation of your company’s finances, and there are specific criteria related to cash flow, profitability, leverage and revenue growth that you must meet to be approved. What if you’re close but not quite there? How will you handle this situation? This is where some entrepreneurs get into trouble. Many have good intentions; they don’t want to fire their employees, lose their homes, have their families suffer or have and their employees’ families suffer.
