Family businesses face a variety of challenges that “normal” businesses do not have to deal with. Clearly the relationships between the family members who are working in the business, and even those who are not, create a different dynamic. One issue in particular is how to manage the money.

When you are in a family business, there is an inherent level of trust that exists. Mom, dad, son and daughter are all happily working to drive the business forward.

But what happens many times is that since everyone has an ownership mentality, each believes they use and spend company funds as they see fit. And sometimes even for their personal benefit.

I knew a family business with a married couple and two children working in the business. Everyone had corporate credit cards, and the parents had checkbooks on top of that. The daughter was spending money to drive marketing; the son was using funds on manufacturing, and the dad was using the company funds as his own personal piggy bank.

The good news is that the company was doing so well that it didn’t matter, until there was a downturn. Then there was yelling, finger-pointing and general chaos.

The opposite can also occur: “We manage our finances very tightly,” says Sally Crowell, president of Crowell Systems in Charlotte, a software provider to health care clients.

“Our daughter has a background in accounting, and we run everything through her. Moreover, all of our systems come with financial management software for our customers, so we practice what we preach.”

It is easy to see how an environment where everyone feels they are entitled to access the bank account can be problematic. Here are five pointers to stave off problems before they crop up:

• Have some financial policies. Who has access to the checkbook? Who has access to cash? How are expenditures recorded? What are the spending limits? What is personal vs. business spending?

• Have a budget. If you are a larger company, this is not an issue, but many small companies shy away from the idea of a budget as they fear how complicated it can be. But at the most basic level, it does not have to be.

The simplest budget is to take last year’s income statement, look at the percent of revenue spent in each of the expense categories, and if it was a decent year, establish those percentages as targets for the next year.

Taking it a step further, if you are aware of any new, big, or unusual expenditures that will need to occur in the coming year, declare them now. Don’t wait until the money is needed, or spend it and inform everyone later.

• Set specific dates and times on the calendar to conduct formal monthly meetings to review the financial statements, measure your progress and ensure all are informed.

• Have a single point of contact to manage the finances. If you are small enough you can rely on a family member. If not, you will need to bring in someone from the outside. You will cringe from the price tag the goes along with a qualified accountant. But the difference between a good one and a bad one is the difference between knowing exactly where you are in the business and proactively driving it and pursuing tax advantages, and basically trying to drive your car with thick mud covering your entire windshield: You can’t see, and it is hard to clean up.

• Have a good external CPA who can review your books once a quarter to ensure that everything is in order.

Not having financial policies and procedures established for the family business can lead to poor spending habits, misunderstandings and lack of trust. But instilling good financial discipline leads to better business performance and a healthy family environment.

Henry Hutcheson is a speaker and author, and president of the consulting firm Family Business Carolina. Email your questions about family business to Henry@familybusinesscarolina.com.