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As a business consultant, I have found that cash flow reporting is an issue many businesses have but never realize it until they audit their payments. There is a program which I follow for my own business which I share with my clients. These rules will improve your cash flow reporting.
Single Access Nonretail
In situations of a nonretail business, only one person should have access to the cash. All cash taken in and paid out should be through the chosen person. Just like not having too many cooks in the kitchen, you should not have too many hands in the cookie jar. The more people with access to the cash, the more issues you might have to deal with. In the case of missing money, only one person can be held responsible.
Who?
I suggest that owners be the ones to control the cash flow for the business. Nobody will be as careful with your money as you are. If this impossible due to distant management, vacations or any other reason, the cash management should go to a responsible employee. She or he should be reminded that cash flow issues will reflect directly on the one who holds the money.
Named Access Retail
In retail situations, it is almost impossible to have one person deal with all of the cash. This could hold up lines and upset customers. I always install some type of register system which requires employees to sign in using a password or badge number. By tracking these transactions, many issues of cash flow can be traced to whomever is at fault.
Ledger
Cash in and cash out needs to be recorded for each transaction. In the case of a business office, cash might only transfer once a day or once a week. A leger should be set up to trace all of these instances. The transactions need to be reported when they happen. Employees should never write notes to remind them to edit the ledger later as it needs to be done immediately to reduce the chance of error including the forgetting of updating.
In a retail business, cash transactions are usually recorded by the register. At the end of the night, a printout can be run to balance out the drawer. If the drawer does not balance out, someone made a mistake and it needs to be addressed. The ledger printout should be kept until the accountant states they are no longer needed. This is usually at the end of the current quarter.
Dealing with Issues
Cash flow reporting issues should be taken care of immediately. I have been known for calling people while they are off work to clear up questions I might have about cash flow reporting issues. In most cases, this type of issue should be foremost on the mind of the owner or accountant. There is nothing wrong in business to drop everything to trace a penny. Issues with pennies turn into larger issues quickly if not put in check.
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