Proper cash control is essential for businesses to operate efficiently and sustain growth. Monthly bank reconciliations, reducing expenses, limiting access to company vaults, and avoiding company credit cards are valuable tips to follow. It’s also important to get receipts, put surplus cash in a bank account daily, and use electronic bank transfers when possible.
Any organization that operates for profit will attest that proper cash control must be maintained. Cash control allows a business to operate efficiently by rewarding shareholders, reimbursing employees for their services, paying creditors, and also helping promote and facilitate organizational growth. With so many ways to properly control a company’s money inflow and outflow, some companies find choosing and implementing the best advice overwhelming. Most businesses find it helpful to conduct monthly bank reconciliations, reduce expenses, and also limit access to company vaults. In addition to these tips, it’s also wise to avoid company credit cards, as this helps reduce financial stress, which allows for greater success in cash control.
Conducting monthly bank reconciliations is an important cash control tip, as it allows a business to verify that its cash is not being misused, misused or lost. Reconciliations can be performed by an internal or external team. If performed by an internal team, it is recommended that quarterly reconciliations be performed by an external team to ensure that no internal fraud occurs. For added security, an independent review conducted by the business owner should be performed on an annual basis.
It is easier to control money the less it is used, making decreasing expenses a very valuable tip to follow. All unnecessary spending should be avoided, while, at the same time, scaling back on any purchases that need to be made. Reducing expenses is especially important for new businesses because they need excellent cash control in order to achieve and sustain business growth.
Cash control is much easier to sustain when only a few people have the ability to use, move or lose it. With this in mind, companies should limit the number of employees who have access to safe deposit boxes. According to the Institute of Internal Auditors, in 2004, internal employees contributed to 60-70 percent of the fraudulent actions that took place within organizations, which makes it very easy to understand why only a limited number of hands should have access to resources in a secure enterprise.
Even though many businesses depend on company credit cards to generate cash flow, cash control is severely affected by them. The more credit cards a business has, the more financial debt it has which tends to cause financial stress. This stress causes business owners to loosen their grip on cash control attempts. If an organization must use company credit cards, only a select few should be allowed to use the cards, and daily reviews should be conducted to ensure they are not being misused.
Other tips for checking cash include always getting a receipt when you pay, as well as getting receipts when you receive the money. It’s also wise to put any surplus cash into a business bank account on a daily basis. One of the best tips to follow is to use electronic bank transfers as much as possible, especially when paying bills.
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