Financial Controls India.
Know exactly where you stand.

Minimum financial controls for Indian SMEs: (1) Monthly bank reconciliation done by someone other than the person who processes payments; (2) Payment authorisation matrix — any payment above ₹50,000 requires two approvals; (3) Monthly MIS reviewed by the founder/board within 15 days of month-end; (4) Petty cash with a float limit and monthly reconciliation; (5) Expense reimbursement with receipts and a designated approver; (6) Accounts receivable aging reviewed weekly. These six controls prevent 80% of common SME financial frauds.

Financial fraud in Indian SMEs is significantly underreported. KPMG's India Fraud surveys consistently show that 70%+ of reported frauds in Indian businesses are committed by employees with tenure of 3+ years — often in roles with control over both payments and reconciliation. Common fraud types: vendor bill padding (fictitious vendors or inflated invoices), payroll ghost employees, petty cash misappropriation, and asset theft. The primary enabler is weak segregation of duties — one person controlling both the payment and the recording.

Segregation of duties means that no single person should have control over an entire financial transaction — the person who authorises a payment should be different from the person who processes it, and different from the person who reconciles the bank statement. For a 5-person finance team, proper segregation is easy. For a 1–2 person accounts team (common in Indian SMEs), the founder must personally perform key oversight steps — bank statement review, vendor payment approval, and payroll sign-off — to compensate for the structural segregation limitation.

A complete monthly MIS for an Indian SME: (1) P&L — revenue, COGS, gross margin, operating expenses, EBITDA for the month and YTD vs budget; (2) Balance sheet highlights — total debtors, total creditors, cash and bank balance, inventory value; (3) Cash flow — opening balance, receipts, payments, closing balance; (4) Key operational metrics — 3–5 business-specific KPIs (orders received, units produced, debtor days, customer count); (5) Budget vs actual variance — for revenue and top 5 cost lines with explanation for variances above 10%. Produced by the 15th of the following month.