Lawrence Cruciana founded Corporate Information Technologies (CIT) in 1997. CIT thrived through the dotcom boom and bust, which may have given Lawrence a false sense of comfort. In hindsight, he says his business was “less organizationally mature.”
His crisis came in 2004. He had four employees at the time, including one trusted admin who handled all billing, receivables, and bookkeeping. Lawrence had reasonable checks and balances in place—running the P&L statements monthly and checking the bank account quarterly.
One day, he got a call from a vendor: a check had bounced, and it was the third or fourth time. Lawrence looked at QuickBooks; all seemed well. Then he looked at the bank and saw a negative balance. Over the next two days, a horror tale unwound. His admin had stopped sending invoices to clients. She made them; she just didn’t send them. She would post fake payments and had also put in phony vendors that eventually traced to her significant other.
After consulting with his insurance agent and the police, Lawrence decided the burden of proof was too heavy. Instead of pressing charges, he began rebuilding by reaching out to each of CIT’s customers to explain the situation. Most were sympathetic and cooperated. It took over a year to sort it all out, and in the end, CIT took a six-figure loss.
Though a hard way to learn, Lawrence realized significant changes needed to be made. He implemented separate personnel for payables and receivables, a quarterly transactional review with a CPA (someone paid to be suspicious), separate bank accounts for various functions to limit the amount of cash available for fraudulent activity, and credit monitoring on employees. CIT, now with twenty employees, was able to rebound, and its administrative policies and processes have since been recognized as best in class in its industry.
Melisa Graham is the communications director at SPARK Publications, editor of b2bTRIBE magazine, author of Used Cow for Sale (a collection of poetry, mom, and wife.
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