Cash Management Optimization For Businesses

Cash is the lifeline of any business, but is especially critical to small business. That’s why having the proper cash management optimization can be the difference between shortfall and surplus.

The Keys to Effective Money Optimization

Regardless of the amount of cash that your small business handles, you’ll want to employ the following best practices to reduce accounting errors and ensure the overall fiscal accountability of all those who come into contact with your precious supply.


Produce an Easy to Follow Trail

First, you will need to track the activities of every individual with access to your small business’ cash. It is important that all cash can be referenced to the penny at any time. Therefore, your system must make it possible to track all sources and pools back to every individual who has come into contact with them. This can be achieved by issuing and recording cash receipts for any and all payment, and requiring management approval of voided/refunded transactions. Finally, all cash deposits must be verified by more than one member of management.


Assign Varying Individual Responsibilities

Second, separate out the cash handling responsibilities among several trustworthy individuals. Have one individual record cash payments to the books, another receive money, another deposit funds, another reconcile the cash in the books, and finally another be responsible for payroll. This way the temptation and risk of fraud decreases as each helps to keep the next honest and in check. Make sure everyone is clear on the exact nature of their responsibilities and what level of access they are entitled to and they will be able to work together to ensure the integrity of your cash.


Perform Regular Reconciliations

Third, you need to assign a senior administrator to confirm the transactions recorded in the books. All amounts in all key stages of the cash management process must be verified on a regular basis. This means checking your bank statements against your cash receipts and deposits on a monthly basis, recording cash payments upon receipt, counting and balancing cash receipts daily and verifying all receipts against deposit slips. It is also a good practice to perform unscheduled reconciliation of each step in the process on at least a monthly basis.


Adhere to Security Protocols

Finally, it is critical that you follow standard security protocols. First, vet any and all employees by performing a background check on them prior to hiring. Second, make sure your cash-handling procedures are clearly outlined and all new employees understand expectations accordingly. Third, keep cash locked in a safe at all times. Finally, limit access to cash to the fewest number of individuals possible, changing security credentials on a regular basis (especially upon terminations).

While it may seem like a tedious process outlining and managing according to these best practices, you owe it to your business and your employees to preserve and protect your most valuable asset, the cash that flows through it all. Spend some time defining a process that follows these and similar suggestions and you’ll be less likely to have problems in the future.


Get Help With Your Cash and Treasury Optimization

We have helped hundreds of business owners effectively manage their cash flow and install the proper internal controls. Get started for free today with your free accounting evaluation.

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