Internal Controls 101: Best Practices for Growing Companies in Nigeria

Growing Companies in Nigeria

As your business expands, it becomes harder to monitor every naira, every invoice, and every decision. That’s why establishing strong internal controls is crucial—especially in Nigeria, where financial mismanagement, fraud, and regulatory non-compliance can be business killers.

So what exactly are internal controls, and how can Nigerian business owners put them to work?

What Are Internal Controls?

Internal controls are the policies, procedures, and systems your business uses to:

• Safeguard assets

• Prevent fraud

• Ensure accurate financial reporting

• Promote operational efficiency

• Stay compliant with local laws (like FIRS tax laws or CAC filings)

Think of them as security protocols—not just for your finances, but for your reputation and future growth.

Why Nigerian Businesses Are at Risk Without Controls

In Nigeria, many SMEs still:

• Operate mostly in cash

• Rely on informal record-keeping

• Have a single person handling both payment and approval

• Lack documented processes

This makes it easy for errors—or even fraud—to go undetected for months.

Best Practices for Setting Up Internal Controls

Here are five essential internal controls every Nigerian business should adopt:

1. Segregation of Duties

Never let one person do everything. For example, the staff who approves expenses should not also handle payments. Divide tasks so one person’s work is automatically reviewed by another.

Example: In a Lagos fashion retail business, the store manager approves purchase orders, while the accountant handles payment processing.

2. Proper Documentation

Always request and retain:

• Invoices

• Receipts

• Delivery notes

• Bank statements

This makes audits and tax reviews easier and helps resolve disputes with vendors or customers.

3. Bank Reconciliations

Regularly reconcile your bank statements with your accounting records (preferably monthly). This helps detect unauthorized transactions or errors early.

4. Access Controls

Limit who can access sensitive data or perform key financial transactions. If you use accounting software like QuickBooks or Sage, ensure user permissions are set properly.

5. Approval Processes

Every major payment—especially for assets, salaries, or vendor payments—should go through a documented approval process.

Tip: Even small businesses in Abuja or Kano can use basic approval templates in Excel or Google Sheets.

Bonus Tips for Scaling Businesses

• Automate where possible: Use accounting tools to reduce errors.

• Train your staff: Make sure your team understands the importance of compliance.

• Review regularly: Your controls should evolve as your business grows.

The Long-Term Payoff

Strong internal controls reduce risk, improve decision-making, and increase your chances of attracting investors, winning contracts, and scaling sustainably.

In Nigeria’s dynamic business landscape, controls aren’t just about protection—they’re about positioning your company for real growth.

Need Help Getting Started?

If you're unsure how to implement or improve internal controls, our firm offers tailored consulting for Nigerian SMEs, NGOs, and large enterprises. Let us help you build systems that protect and propel your business forward.