You may have read this news last week. Patisserie Valerie suspended its shares as well as its chief financial officer after finding “significant, and potentially fraudulent” accounting irregularities in its business. Patisserie Holdings warned these potential irregularities had “significantly” impacted the company's cash position and “may lead to a material change in its overall financial position”.

According to reports, the accounting hole is estimated to be of around £20m.

It hit the headlines in part because the company’s major shareholder and Executive Chairman is Luke Johnson a well-known private equity investor and business commentator.

What makes this ‘fraud’ exceptional is that – unlike the problems experienced at Carillion and Conviviality earlier this year, which were largely due to greed and inept management – it involved a hole in the company’s cash balance. In fact a reported £28.8m of cash at the end of March was in fact revealed to be ‘hidden’ overdrafts of £9.7m.

No doubt we’ll hear more about just how the chief financial officer was able to hide overdrafts as well as plunder cash, but just think for a minute whether this could happen in your business?

Of course it couldn’t!

I’m sure Luke Johnson would have said the same because here is an investor well practiced in overseeing businesses from a seat in the boardroom rather than in an operational capacity. Shouldn’t he have had his eye on safeguarding the cash pile?

You see it is far too easy to become complacent: if cash is tight then you probably have cash flow forecasts telling you how much you can afford to spend, when taxes are due and whether you can make payroll. But with £20m+ in the bank you can afford to relax……or can you?

Whatever the size of your business, however qualified your staff and however good your systems there is no excuse, as the business owner, for not knowing your numbers on a daily, weekly, monthly and annual basis. None.

And this doesn’t mean getting someone else to tell you. It means getting your external accountant to set up a cloud accounting solution to show you, not less than once a month, exactly what your profit and loss account, balance sheet and cash summary are telling you, how much cash is in your bank accounts, how much your customers owe you and how much tax you owe.

Luke Johnson knows he dropped the ball. Don’t you make the same mistake.

To your success.

Noel Guilford