cash-flow-tips

10 Top Tips for Controlling Cash

10 Top Tips for Controlling Cash is a simple way of how you can manage your business cash.Kenyans are entrepreneurial people.They work hard to earn a living.However majority do not enjoy the fruits of their businesses.Reason being; poor management of their cash-flow.Hence why we came up with this post to help business owners account for their cash.

Cash can be easily misplaced or misused leading to losses for a business. Cash controls are very important in protecting everyone who handles cash. They provide guidance on cash handling. They also remove the suspicion of fraud – and the temptation.

It is important to follow the 10 Top Tips for Controlling Cash as follows:

 

  1. Keep money coming in separate from money going out

10 Top Tips for Controlling Cash

Never put cash received into the petty cash tin. It will cause errors and confusion in the accounting records.  All money coming into the organization must be paid into the bank promptly and entered into the records before it is paid out again. Otherwise it can be confusing when reconciling the cash balance.

  1. Always give receipts for money received.

10 Top Tips for Controlling Cash

This protects the person receiving the money and assures the person handing it over that it is being properly accounted for.  Receipts must be written in ink, not pencil, and preferably from a numbered receipt book.

  1. Always obtain receipts for money paid out

10 Top Tips for Controlling Cash

Sometimes this may not be possible, for example, when purchasing items from a market. In this case the cost of each transaction should be noted down straight away so that the amounts are not forgotten. Then they can be transferred to a petty cash slip and authorized by a line manager.  Remember – no receipt means there is no proof that the purchase was made.

  1. Pay surplus cash into the bank
10 Top Tips for Controlling Cash

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Having cash lying around in the office is a temptation to defraud and the money would also be managed better if it were earning interest in a bank account.  A casual approach to cash on the premises might lead to people wanting to ‘borrow’ from it. Often fraud has started in this way.  Every attempt should be made to pay cash into the bank on a daily basis or, at the very least, within 3 days of receipt.

  1. Have properly laid down procedures for receiving cash

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To protect people handling money, there should always be two people present when opening cash collection boxes, envelopes and other sources of money.  Both people should count the cash and sign the receipt.

  1. Restrict access to petty cash and the safe

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The keys to the petty cash box and the safe should only be given to authorized individuals.  This should be recorded in the organizations Delegated Authority document.

  1. Reconcile the petty cash book

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The petty cash should be counted and reconciled at least once every week. Any discrepancies must be reported straight away to a manager, and investigated.

  1. Keep cash transactions to an absolute minimum

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Petty cash should only be used to make payments when all other methods are impossible.  Wherever possible, suppliers’ accounts should be set up and invoices paid by cheque.  The advantage of paying for most transactions by cheque is that this has the effect of producing an extra set of records in the form of the bank statement.  Also, it ensures that only authorized people make payments and it reduces the likelihood of theft or fraud.

  1. Manage and monitor staff advances

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Any cash advance given to staff (e.g. to go to the field) should be accounted for and cleared before another advance is given. All payments made must be justified by receipts. Any balances owed to or owed by the member of staff must be paid to clear the advance.

  1. Be clear about who is responsible for what

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Everyone in the organization should be completely clear about who is responsible for handling cash, and what their specific responsibilities are. If possible, set out the responsibilities on job descriptions. Everyone should also know who is not allowed to handle cash!

Following these 10 Top Tips for Controlling Cash should minimize cash flow problems.Every business relies on the health of it’s cash flow.Do not ‘borrow’ or ‘steal’ from your business.

We at Jeff Mwangi and company have been helping business do this for the last 10 years.visit us today.View our service page.click here

Jeff Mwangi & Company
Muindi Bingu Street 28
Nairobi, Niarobi 00100
Kenya
Telephone: 0723 225 441
Telephone: 0704 151 798
Email:

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