There are a lot of risks associated with running a business and managing its assets. Learning how to safeguard your company’s cash is one of the viable ways to minimize those risks.
Cash is a very important asset for every business. It provides a quick and reliable means of making and receiving payments without much hurdles. Cash transactions are also less complicated to evaluate and document.
Whether it is cash-in-hand or cash equivalents, it is important you implement useful strategies in guarding against possible cash risks affecting your business.
1) Get a Company Account
As a business owner, it is sometimes hard to separate your business money from your personal finances. This is particularly difficult if your personal money is your major source of business capital.
If you’re running a sole proprietorship where you are in charge of everything, there is a higher tendency for inadequate business records. Maybe because there’s no one else to possibly check and balance your financial activities.
This is where a company account comes in very handy. With that, it is easier for you to accurately monitor your transactions through your company account’s financial statement.
For larger companies, a corporate account offers better restrictions to cash flow and improves account transparency.
2) Reduce Cash Redundancy
Having too much extra cash around your offices can be very tempting. You can be lured into unnecessary spending and can easily misplace money. Your employees can easily be tempted to “borrow”from company cash (and sometimes never return) or even steal them.
To avoid this, always deposit surplus cash into the bank on a regular basis, probably daily or at least once a week.
3) Restrict Access to Cash
The lesser the number of people with access to company cash, the easier it becomes to collate accurate accounts. If anything goes wrong, you would know who exactly should be held accountable.
Also, you can ensure that there are more than one signatory to your corporate account. That way, one person cannot just make transactions anyhow s/he wants. It improves the integrity of the transactions on the account.
4) Establish a Transaction Approval System
Transactions on the company account, especially withdrawals, should always be endorsed by appropriate authorities.
You can set up a system that verifies every transaction for approval before effecting them. The reasons for payments must be authentic and reasonable too.
5) Use Other Means of Payment
One downside of using liquid physical cash is that it is not recorded real-time into the bank statement. This can cause issues in a case where a transaction is recorded but the money was not eventually sent into the account.
You can use other payment methods that can reflect directly on the bank statement, such as bank transfers, cheques etc.
6) Issue / Collect Receipts
A transaction without proof can easily be denied or altered. Whether you’re receiving or giving out cash, always document the receipts.
Proper management and security of cash assets is very instrumental to the general safety of your business.
Loss or misplacement of cash can reduce both your business value and your purchasing power. So it is only wise that you safeguard your company cash as much as you can.