Controls Over Cash Receipts
How will you make sure you get all the cash you receive? Controls over cash receipts are essential to prevent errors and theft.
In this article we discuss arrangements you can use to make sure your get all your cash receipts.
Your customers will make payments to you with cash, cheques, debit card and bank transfers. Having the right controls in place will ensure that you receive all the cash that is paid to you.
Ensuring controls over cash, cheque and debit card receipts:
- Issue receipts at the point of reception of cash and cheques. Depending on the systems used, the receipts may be manual or from a cash register. For manual receipts, pre-numbered receipts can be used.
- For debit cards, issue a point of sale receipt.
- At the end of the day, the cashier must record the total cash, cheques and debit card payments received. A third party should check the cash receipts against the totals calculated from the receipt book. If a cash register is used, a report from the cash register can be used to perform the checks.
- Keep cash and cheques in a safe until they are deposited in the bank.
- Keep the deposit slips received when the cash and cheques are deposited.
Ensuring effective controls over pre-printed receipts
- Keep the stock of unused receipt books in a safe place and keep a record of the number of the receipt books.
- Track the numbers of receipts in use to ensure that they are all accounted for.
- Issue receipts in sequence and keep voided receipts in the receipt book.
- Get a third party to check the receipt book to ensure all receipts are accounted for.
Separation of job duties
The person responsible for receiving and depositing cash should not be the person who keeps and reconciles the accounts. A person other than the cashier should check the daily cash receipts.
Reconciliation of deposits to receipts
Reconcile the deposits in the bank with the receipts daily and resolve differences between the two. The person who does this reconciliation should differ from the person who receives and deposits the cash.
In smaller companies, it may not be possible to split the accounting duties between more than one employee.
A supervisor should review the daily cash receipts and deposits against the receipts and deposit slips.
For many businesses, cash from sales is the main source of funding, so effective cash controls are vital. Implementing the arrangements suggested above will improve your control over cash
The main take away are:
- Issue receipts for all payments from customers.
- Check the daily collections against the receipts.
- Check deposits to the bank against daily receipts.
- In small businesses, the owner or manager’s supervision is an effective control.