I have just started doing the books for a small company and one area that they seem to need improvement is dealing with their cash.
Whatever they set up it needs to be easy to do without any hassle (or else it wont get done)
They have incoming cash from Sales which i they already mark down but then 3 of the staff carry their own "pot" of cash around to pay for fuel etc. They are very good at keeping receipts and would have these on a monthly basis.
What is the best way to ensure that the cash is reconciled properly on a monthly basis? how can there easily be a cut off? and how can i ensure that there is no overlap on the months with the cash or receipts.
Hi Setmoa, Cash is the BIG problem in business. My approach would be this.....
1st - ALL cash in the business goes into the bank save a small petty cash amount (say £50) for incidental items (milk, coffee etc.). 2nd - Persons in the business who expend monies in relation to business activities (purchase of fuel, client meetings, travel, subsistence etc.) should be required to complete an expenses claim form backed up with receipts for the expenditure which is then reimbursed to them via a bank transfer/cheque etc.
This way, there will be no need for cash reconciliation (except for the petty cash box which is easily controlled) and you then have in place a strong expenses system. I used to administer the expenses for a company which had guys travelling throughout Europe, Middle East and Africa (days before the Euro) and had to manage 20-25 different currencies - I found that by issuing them with a company credit card for which they were responsible for paying, ensured that they submitted regular expense claims and were paid in a timely manner.
You didn't mention whether the company was Limited or not. If it is, you need to instil upon them that the cash is NOT theirs, it belongs to the company.
Unfortunately the company (ltd) like to keep hold of the cash it receives in so that they can minimize the bank charges and hassle (they claim) of going to the bank.
So i have to try to make the best of the current situation!
