Cash Control Receipts

What is Cash Control for Receipts?

One of the important aspects of managing your small business is cash control.

Receipts in the form of cash need to be subject to a systems of controls to prevent misappropriation or misuse.

Cash receipts normally consist of three types, over-the-counter receipts from cash sales, electronic transactions that deposit cash directly into your business bank account, and cash or cheques received through the mail from customers making payments on credit accounts.

Each type of transaction will require different control procedures.

Receipts from Cash Sales

Receipts from cash sales should either be rung up on a cash register or logged on a sales recording sheet in clear view of the customer. The customer acts as one of the initial controls for managing cash receipts, as they are likely to identify and dispute any discrepancy between the amount of cash they are paying and the amount recorded by your employee.

At the end of the days trading the cash balance should be counted and compared with the total as per the sales records or register tape. The reconciliation of the records and the cash balance should be checked and verified by someone other than the person who collected the cash. A copy of the sales record and cash tally are provided to the bookkeeper to enable them to prepare journal entries to record the transactions in the accounting records.

These procedures ensure that no one person is responsible for all steps in the process, the person who collect the cash from sales and the person responsible for banking the cash should not have access to the accounting records, and the person responsible for entering the transactions in the accounting records should not have access to the cash.

Receipts from Electronic Transactions

In some ways, receipts from electronic transactions are easier to manage than cash transactions as the 'cash' is not handled physically.

As with cash receipts from sales, the sales value should be rung up on a cash register or entered onto a sales record sheet in view of the customer.

Coding can be used to identify which transactions are cash and which are electronic to enable the cashier to verify the cash balance.

The transaction amounts are entered into the accounting records by the bookkeeper using the sales records and verified each time a bank reconciliation is done.

Cash Received in the Mail

Procedures for managing the receipt of cash through the mail also rely on the principles of separation of duties. The person who opens the mail and locates the cash or cheques within should prepare a list of the amounts received. One copy of the list accompanies the cash or cheques to the person responsible for banking the days takings and another copy does to the bookkeeper to use in preparing entries in the cash receipts journal.

Again, these procedures ensure that no one person is responsible for all steps in the process, the person who opens the mail and the person responsible for banking the cash should not have access to the accounting records, and the person responsible for entering the transactions in the accounting records should not have access to the cash.

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