You’re Finance’s top protector – from fraud, compliance issues and legal trouble.
But that role has become more difficult in recent years as the lines of legality continue to blur.
Common catalysts
The solution? Having a pulse on what’s what in the legal world. Take a look at six factors that often result in negative legal outcomes, so you can work against them in your Finance department:
1. Poor documentation. Whether it’s a customer dispute, IRS audit or problematic employee, a documentation trail can either be your downfall or your saving grace.
For you – and all finance staffers – keeping track of every instance of trouble is key. That includes anything from records of when invoices were received late, to times when policies were disregarded.
Another critical tool in your documentation efforts: email. Retain any emails that contain contract terms, specific dates, argumentative language or exchanges that could potentially escalate. (To avoid clutter, you could move these messages to a separate folder within your inbox.)
2. Ignorance of rules. You have finance policies down pat – but what about your staffers? Other employees? And what about more general, companywide policies?
When matters are taken to court, judges and juries expect that policies are well known. “I’m not sure,” or “I think so,” will only negatively impact your company’s credibility. That’s why it’s essential to:
- Train new employees immediately. That includes your own teams and others using your policies, like biz travelers. You may have to talk to HR about including your policies more during the onboarding process.
- Communicate policy changes right away. Remember that often, a message from the CFO or other senior leaders nets more attention from recipients.
- Conduct refresher training quarterly or annually. That way your policies and updates get through to everyone – even those who overlook written messages.
3. Exaggerated praise. Managers can run into trouble when they want to discipline an employee, but haven’t documented or addressed performance issues with that person. They’ve only iterated the good, not the bad.
Remind your finance supervisors: When discussing performance, it’s fine to start with a positive: “You’re great at ABC.” But if there are problems, make sure staffers know: “We need to work on XYZ.”
It’s better to be the bearer of bad news in the office than an unreliable source in court.
4. Glossing over complaints. Another thing you and other managers don’t want to put on the back burner is customer or employee complaints. If a court thinks someone didn’t take a complaint seriously, that could damage their chances of coming out on top in a legal dispute.
Whether it’s a late payment, contract breach or possible harassment, your company should assure the person that the issue is being investigated immediately and do so. Later, someone should follow up and explain exactly what’s being done to handle it.
5. Determining staffer accommodations. It’s your job to direct and delegate. But one instance where that doesn’t serve well: coming up with reasonable accommodations for employees with disabilities.
To comply with the Americans with Disabilities Act (ADA), companies must take part in the interactive process, where finding an accommodation is a give-and-take between the company and the employee. And in the event of an accommodation request, you’ll want to pull HR in right away. Then you can all sit down, discuss the situation and come up with a solution together.
6. Terminating quickly. When an employee’s let go abruptly, they’re more likely to feel cheated or discriminated against. And that can spark a lawsuit.
In those cases, courts want to see that your company made an effort to help the employee improve before resorting to termination. When performance issues come up in Finance, managers should work with the staffer to create a development plan and check in regularly on their progress. If things don’t improve and your company’s forced to consider termination, you can at least show the court that you all took the correct, considerate steps.
