HOW DO YOU SAFEGUARD YOUR CASH?

Whatever type of financial resource your company owns—cash, money, currency, coins —must be protected from any unscrupulous activities.  Cash fraudsters have always been attracted to it, which has led to corporate losses and, in the worst cases, bankruptcy throughout history.

If internal cash control is lacking or inadequate, this minor issue will cause a cascade of problems for your company. Building trust on mediocrity will not help your business grow and flourish. 

As no trust issues are put on this writing, a cash misappropriation or errors are inevitable.  But if trust issues rings a bell in your company, then the following general internal cash control measures must be considered:

• Segregation of Duties – An ideal internal control for cash is to have a segregation of duties. Different persons are assigned in the collection of revenue or receivables, authorization of cash disbursements and recordings. The likelihood of cash-related fraud, such as understating cash sales, or skimming, or unpaid accounts receivables previously received, is decreased once task segregation is put into place.

• Daily Deposit of Cash – Keeping a large sum of money in the collecting box is a no-no. This may open opportunities to employees to steal. It is encouraged to have a daily cash deposit and set-up an amount for maintaining petty cash. If daily bank deposits are not applicable,  an alternative control is to have the cash stored in a secured area like safe.

• Disbursement by Check – The ideal way to pay suppliers is with a check made out specifically to them.  This deters staff assigned to the disbursement process from stealing funds. A decent internal control is having at least two people sign a check, however this is not always the case. Petty cash is a little fund that businesses can set aside for just small needs.

• Observing proper liquidations- Unaccounted liquidations are the most typical sort of cash fraud. They occur when cash advances made by your staff are not accounted for. Documents attached for example, are supported by legitimate documents, and cash advance requests are approved by the proper level of authority. Some documents may be altered or tampered with in order to facilitate a transaction that does not take place.

• Wire Transfers – Whereas any payment may now be done online, wire transfers have become the most convenient and easily traceable method of payment. Businesses must ensure that only people with approval authority have access to online bank accounts by implementing security features such as two-factor authentication, mobile PIN, or transfer limits on online banking applications. 

• Surprise cash count – the scheme of cash fraud perpetrators is best discovered when a surprise cash count is conducted since they are unprepared. This is something that can be done regularly by business owners to detect any cash fraud. Is the cash collection recorded tallies with cash counted? If not, this is already a trigger point for cash shortage.  This type of internal control over cash instills discipline that employees function is that of a fiduciary role.

• Timely bank reconciliation – Reconciliation is a basic accounting process that verifies the money spent or earned matches the money leaving or entering an account at the end of an accounting period. Your cash flows reported in the books must reconcile with that of the bank, excluding any unidentified bank errors. Preparing a timely bank reconciliation helps you spot and identify any cash in and outs from your cash log to bank statements, vice versa. 

The nature of internal control over cash in a small business set-up varies as that of a corporate business. In support of this, having the business owner with overseeing responsibilities on cash transaction cycles suffices.

As a business owner or in-charge of corporate cash management, you should have taken action in the event of any cash fraud instances involving your company. As history does not wish to be repeated, it is just a lesson from the past that can save and expand your business. Get your cash management under control, let your cash multiply!