Banka: Keeping a handle on cash flow

Cash seems to be the one asset that can just get up and walk away.

There are several methods of cash control and all are a variation of one central method, but are different due to the type of business.

Once a cash control procedure is decided upon, tested and modified so that it works, it should be written down so that when new staff are hired, there is a document that can be referenced when training the new person.

One area that always seems to create a problem is what to do if the customer has requested a refund.

I have been in establishments which just don’t give refunds because there is just not a procedure to be able to do that.

Instead, the customer would receive an ‘instore’ credit to purchase another product.

In all cases the business should start its day with a cash float.  This can be one general cash float, or an individual float for each staff member (depending on the business).

This float should be counted in the morning to make sure that it holds the correct amount of money before starting the shift.  The amount of money in the float needs to be determined by management and is usually dependant on the type of business volume.

During the shift, there should be cash drops made, so that the cash register or personal float does not get very much above the float amount.  This helps to protect the business and staff members from robbery and theft.

The money should be dropped into an agreed upon spot such as a safe or vault on the premises.  If there is no safe or vault available, then perhaps the owner or senior staff person should collect excess cash every few hours.

The business needs to have some method of recording sales, usually a cash register.  If no cash register is used, then sales slips are required.

At the end of the day or shift, the float is counted and the amount in excess of the float amount from the start of the day (taking into account the cash drops) is the cash that needs to be deposited to the bank.

The clerk should balance the cash deposit with the sales or cash register slips at the end of each shift.

At the same time the debit and credit card receipts should be balanced to the credit card machine print out and also to the cash register.  There should be a tally sheet of the cash that can be matched against a tally sheet of the sales slips or cash register print out by sales clerk.

These tally sheets should be checked again in the morning by someone that didn’t have contact with yesterday’s cash. This person could be the person responsible for creating the daily bank deposit.

The business also needs to determine when the deposit will be taken to the bank, on a daily basis, or perhaps weekly.

Still, there should be a separate bank deposit slip for each day’s worth of cash sales. To record the deposits into the accounting system can also be handled many different ways.

The business can collect the information on an excel spreadsheet and enter the information into the accounting program once a month, or someone can enter the information on a daily or weekly basis.

The monthly cut off is important so that the information can be reconciled with the bank statement, so make sure that you deposit all funds from the current month on the last day of the month.

Another option that some businesses use, depending on their cash flow, is to balance the accounting records to the bank statement on a daily basis using Internet banking.

For situations where something needs to be paid for with cash from the till, I would suggest that the business set up a separate petty cash box just for the purpose of paying miscellaneous small items.

On a weekly or monthly basis the receipts collected can be totaled and then a cheque written to replenish the petty cash which should always be at a specified level whether that is all cash, or cash and receipts.

Another issue is where to keep the float until the next morning. Some small businesses have the managers take the float home with them and bring it back in the morning.  Other businesses have a small vault or safe installed on the premises. Others may store the float in a locked fireproof file cabinet.

Gabriele Banka, DAcc., CGA is the owner of Banka & Company Inc.



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