Learn something new every day
More Info... by email
Any organization that operates in a for-profit manner will testify that proper cash control must be maintained. Controlling cash allows a business to operate in an efficient manner by rewarding shareholders, reimbursing employees for their services, paying creditors, and also to help promote and facilitate organizational growth. With so many ways to properly control a business’ cash inflow and outflow, some companies find it overwhelming to choose and implement the best tips. Most businesses find it beneficial to conduct monthly bank reconciliations, decrease expenditures, and to also limit access to company safes. In addition to these tips, avoiding company credit cards is also wise, as this helps to reduce financial stress, which enables increased success at cash control.
Conducting monthly bank reconciliations is an important cash control tip to follow because it allows a business to verify that its cash is not being abused, misused, or lost. The reconciliations can be performed by either an internal or external team. When performed by an internal team, it is advised that quarterly reconciliations be performed by an external team to ensure that internal fraud is not taking place. For even further safeguard, an independent review conducted by the company owner should be performed on an annual basis.
It is easier to control money the less that it is used, making decreasing expenditures a very valuable tip to follow. Any and all unneeded expenses should be avoided, while, at the same time, scaling back on any purchases that must be made. Cutting back on expenses is especially important for new businesses because they need superb cash control so that business growth can be obtained and sustained.
Cash control is much easier to sustain when only a few people have the ability to use, move, or lose it. Keeping this in mind, companies should limit the number of employees that have access to safes. According to the Institute of Internal Auditors, in 2004, internal employees contributed to the 60 to 70 percent of fraudulent actions that took place within organizations, which makes it very easy to understand why only a limited number of hands should have access to assets found in a company safe.
Even though many businesses depend on company credit cards to generate cash flow, cash control is seriously affected by them. The more credit cards that a company has, the more financial debt it tends to have, which leads to financial stress. This stress causes company owners to loosen their grip on cash control attempts. If an organization must use company credit cards, only a select few should have authorization to use the cards and daily reviews should be conducted to ensure that they are not being abused.
Other cash control tips include always obtaining a receipt when money is paid out, as well as giving receipts when money is received. It is also wise to put all surplus cash into a company bank account on a daily basis. One of the best tips to follow is using electronic bank transfers as much as possible, especially when paying bills.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!