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