| Cash is King, so they say, but cash is also a double- | | | | business expenses. |
| edged sword. It is the lifeblood of your business, but | | | | Bank all cash before the close of business, or the |
| can also become a curse. Be vigilant, and take extra | | | | following day. If cash is required in the business, |
| care when dealing and accounting for your cash. | | | | operate on a petty cash system. Advance a cash |
| Dealing with check receipts or credit card transfers is | | | | check to the petty cash on a weekly basis, rather than |
| very simple. A wide array of accounting software is | | | | using the cash on hand for petty cash expenses. The |
| available on the market, which offers a seamless | | | | petty cash system creates a proper paper trail for |
| integration from your credit card settlements and bank | | | | cash accounting. |
| deposits statements into your accounting records. | | | | If certain suppliers insist on cash only, maintain a cash |
| To date, no such software exists for cash, save for, | | | | float, with proper accounting for such cash |
| point of sale terminals records (which overlooks cash | | | | transactions and bank all unused cash. If no alternative |
| outside the system) the business owner's information | | | | exist, but to use cash received, ensure that proper |
| on a spreadsheet or manual records. Millions go | | | | record keeping is in place. Example: Say the business |
| missing on a daily basis in most small businesses, due | | | | receipted $ 5000.00 for the day, but urgently had to |
| to theft, losses and sheer negligence by the owner. | | | | use about $750.00, write on the till slip that $750.00 |
| Constant "drawings", from cash on hand, by the owner | | | | was utilized. |
| also contributes to this cash "gap". | | | | The relevant entry for the $750.00 debit should be |
| In a nutshell, the cash gap, is that variance between | | | | affected against the cash control account. The cash |
| cash received (debtors, cash sales, advances) less | | | | control account is a special account for cash sales. |
| cash banked and transferred to the recorded cash | | | | Credit cash sales, and debit cash control. Clear this |
| float or cash on hand. In most cases, the business | | | | cash control account, by banking the available cash! |
| owner bears most of the responsibility for this sad | | | | Make a further note that the balancing $ 4250.00 was |
| state of affairs. | | | | banked on a certain date. This will enable your |
| The nifty accounting software, that builds accounting | | | | accountant to trace precisely where the $ 750.00 |
| records in seconds, only reveal a part of the story. | | | | went, and compare the deposit on bank statement to |
| Cash invariably gets under reported in small business | | | | the note on the till slip summary. |
| accounting. | | | | Business owners are known to complain or gloat |
| Even the most advanced point of sale terminal, will not | | | | about, sacrificing a regular salary. Whilst this comes |
| address a cash management problem, if the business | | | | with the territory, and serious cash flow problems are |
| owners hands are continuously in the till. Of course the | | | | encountered by small business, including cash pilferage, |
| owner can do as he/she please, but then he/ she | | | | the owner is not blameless. Maybe all those drawings |
| should refrain from seeking advice if discipline is lacking. | | | | on a daily basis could have contributed to a fixed |
| Surely, the owner is entitled to the cash in the | | | | salary at month end, for the owner. Theft and cash |
| business? Yes, but then I will respectfully suggest, that | | | | losses can be addressed early, if the methods |
| the owner set a decent salary for himself/ herself. Pay | | | | highlighted above, are implemented. |
| yourself, as if you were an employee of the business. | | | | Responsibility and control goes hand in hand. |
| It is dangerous to mix personal expenses, with | | | | |