Internal Controls – Cash Receipting

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Internal controls are an important part of any business, regardless of the size or type of business you  run. Cash is inherently risky because it is easy to take, in high demand, and not readily identifiable to the business. A few simple controls in place can minimize your risks, protect your assets and give you peace of mind.

Payments can come in many forms and from many sources. Cash, checks, money orders and credit cards can be receipted in person over the counter, while checks and money orders can also be received through the mail.  Customers should be discouraged from placing cash in a drop box or mailing it in. At a utility business I worked at we had a customer that consistently placed cash in the drop box, even though we told him repeatedly not to.

Many customers today use bill pay through their bank to make monthly payments for services such as gym memberships, utilities, etc. Your bank may send out hard copy checks or pay electronically using a wire or ACH. Customers like the options of paying in person, over the phone, or online. With all of these payment options, business owners need to have controls in place to make sure revenues are receipted securely and accurately into their business.

For payments received over the counter, there are several pieces of information you want on your receipts. The first is the name of the business, because this identifies where the receipt originated. Second, you want the receipt to have a sequential number assigned to it. This gives you a way to track the receipt for control purposes. A quick control test is to scan your receipts for missing receipts and then follow up on those missing. This is easy to accomplish if your receipts are sequentially numbered.

The third piece of information is the total amount of the purchase and the “mode” or type of payment received, either cash, check or credit card. At the end of the day, your transaction report will list out the total monies received by mode of payment. When balancing the till, you want to make sure that the cash, checks, and credit card receipts on hand match the totals on the report, by mode of payment. Differences could indicate a fishing scheme where an employee takes cash and replaces it with a check from a previous day. The same holds true for your validated bank deposit slip. Make sure the deposit is made in-tact, meaning in the same amounts and modes of payments as your daily transaction report. If possible, make sure the person handling the cash is different than the one who maintains the bank accounts and accounting records. This is called segregation of duties and sometimes in small businesses it is really hard to separate duties.

Payments received through the mail (checks) should be opened by someone other than your main cashier and immediately endorsed with a business “For Deposit Only” stamp. Ideally the person opening the mail would create a control sheet (this could be as simple as an adding tape) that would agree with the eventual deposit of the mailed in checks.

If monies need to stay in your place of business overnight, make sure they are secured and access is limited to authorized employees only. If you don’t want monies held overnight at your business location, consider using a bank that has a nighttime dropbox. Deposits can be placed in locking or sealable deposit bags and dropped off at the bank after work by a responsible person.

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