Small Business and Business Software

Cash Controls For Small Business

Cash Controls For Small Business – When deciding how employees will access company funds, not everyone needs the same set of benefits. By choosing a modern cost management solution, small businesses can control costs while adapting as the company grows.

Administrators can tailor these spending options based on custom policy builder roles, spending categories, business context, or other settings. By benchmarking these cost controls, employees are empowered to drive business costs, while CFOs maintain control in a small way.

Cash Controls For Small Business

Cash Controls For Small Business

As small businesses expand, policies must become more flexible due to increased costs, the complexity of organizational growth, the need for transparency, and the growing number of remote employees who require team travel.

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Below are a few examples of how cost control can give small businesses peace of mind when it comes to reconciliations and reimbursements:

For example, take a senior sales representative on a business trip to a new destination. They are tasked with taking the client to lunch during the trip. They are vaguely told: “It’s beautiful somewhere, but don’t overdo it.” Two weeks later, accounting sees a bill of more than $1,000 for a dinner, attended by compliance, managers, and finance.

Since they never got a per diem set for their spending and their corporate card had no limits, there was nothing stopping the transaction from being approved.

For employees, corporate cards are a means of freedom when traveling. A new level of cost control provides access to product subscriptions, meets general office needs and even steps in for emergencies. And the ability for CFOs to view staff costs at a granular level in line with small business metrics, regulations will ensure a successful balance between policy and growth.

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As much as companies want to trust their employees, unfortunately, expense fraud and compliance violations are relatively common. In a study of 600 CFOs by accounting software provider Beanworks, 61% of respondents reported that their department had witnessed misuse of employee expenses.

Expense fraud can take many forms, from charging for expenses only for personal use, to billing for transportation expenses that were never actually incurred, to claiming reimbursement for items that were never purchased. Collusion may also occur between employees who bill separately for transportation expenses, even though they traveled together.

Fraud can often occur because employees don’t know the value of their policies. By setting automated policies in an expense management solution, CFOs and small business owners no longer need to double-check the validity of receipts or worry that their teams are spending company money on unauthorized items.

Cash Controls For Small Business

Patreon, an artist-focused membership platform, outpaced its competition in 2022 with deep policy controls built into technology for horizontal and vertical visibility.

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“We can configure policies by level and category, and it can be role-specific. There are many ways [we] can enforce destination control policies, which is how we want to enforce user rules,” says Chris Ryu. , Patreon’s senior director of financial operations.

With Liquid™, small businesses can set costs in whatever configuration best suits their company’s growth. For growing businesses, finding a software solution that is intuitive and quick to integrate while still being affordable is key. Whether it’s for daily office needs or setting parameters while traveling, Liquid Card provides an instant view of every stroke – physically or virtually.

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Liquid also uses artificial intelligence spend auditing technology and internal controls to track any signs of suspicious transactions. With control policies that CFOs can tailor to a granular level, customers have been found to achieve a 90% off-policy cost reduction and 100% peace of mind. Tim is a QuickBooks Time (formerly TSheets) Certified Professional. , QuickBooks ProAdvisor and CPA with 25 years of experience. He uses his skills for small business accounting in Fit.

Eric is a staff writer for Fit Small Business and a CPA with a focus on accounting. He spends most of his time researching and studying to give everyone the best answer.

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Internal controls, in general, are methods used to protect assets and achieve financial and operational objectives. Establishing internal cash controls for a small business involves establishing policies for handling physical cash and checking accounts and assigning custody responsibilities. Cash control is an important component of best cash management practices because cash, being the most liquid of all assets, is highly susceptible to theft and misuse.

To help you, we look at 19 best practices, divided into cash control for receivables, cash control for payments, and general cash control for small businesses.

6 Best Ways to Control Cash for Receipts 1. Ask customers to pay by check, credit card, or electronic funds transfer (EFT).

Cash Controls For Small Business

Carrying too much cash increases the risk of theft. You can reduce this risk by asking customers to pay with something other than cash. Although there is usually a fee for accepting credit cards, it may be worth paying to avoid the risk of cash transactions.

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When you receive cash, it’s best to use cash registers, safes, and vaults because they can help protect what is physically received from customers. Point-of-sale (POS) systems often include built-in cash registers that are only opened at point of sale and have additional features that are only available to the owner or manager. At the same time, safes and vaults serve as temporary storage for cash, so employees do not have easy access to them. You can keep cash in them until you deposit them in the bank, which should be done at least daily or weekly for added security.

An Official Receipt (OR) shows that the customer has paid the correct amount. The amount in OR should match the invoice amount. If the customer pays in installments, the OR must clearly mention “partial payment”.

Another important control function that should be taken into account is the initial numbering of ORs. If you use an accounting program like QuickBooks Online, it will automatically generate a numbered receipt as soon as you make a payment.

When we ask customers to pay electronically, such as by EFT or PayPal, you must ask for their account or invoice number in the reference number or message in the recipient field. This way, when reconciling payments and invoices, you can easily match paid invoices without requiring the customer to send you a manual remittance confirmation.

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A customer statement or statement of account (SOA) informs your customer of their outstanding balance. Monthly SOAs can help identify unregistered receipts, as customers can dispute the SOA if they have already paid off the balance.

Keeping cash collections unchanged means cash collections should equal cash deposits. For example, if a business collects $3,215 from customers today, the same amount must be deposited in the bank, which means you cannot take the money from the collection for other purposes, such as paying suppliers or for small expenses.

It’s important to keep them intact so your books and bank receipts match and ensure you have a paper trail for any money spent. For added security and tracking, create a daily cash summary that shows all cash receipts and make sure the totals match the daily deposits.

Cash Controls For Small Business

When a check is “cashed,” it means that whoever holds the check can cash it at the bank. While this is convenient, the risk of the check being stolen and used by an unauthorized person increases dramatically. To avoid this situation, put the payee’s name on the check, such as “Payable to the order of the supplier company”, so that only authorized personnel of the supplier company can cash or deposit it.

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In a small business, the owner should always review and sign the checks. You can instruct an employee to collect all supporting documents, such as a purchase order (PO), vendor invoice, or receiving report, and prepare a check. After that, the owner will review the supporting documents, check the amounts and complete the check with his signature.

Let’s say you’ve already written a check and then realize you made a mistake, or the seller says they prefer online payments. Before depositing the check, write the word VOID on the face of the check so that it cannot be used again. Alternatively, you can mutilate the check by partially tearing it. If you usually keep paper copies of the checks you issue, keep the canceled check with the other checks so you can easily see that all checks have been accounted for.

Invoices, purchase orders and receiving reports must be reconciled before processing for payment. This process is called three-way negotiation. First, the product quantity and price on the purchase order must match the invoice quantity and price. Second, the amount on the receipt report must match the amount on the PO. Thirdly, the goods mentioned in the acceptance act must match the goods mentioned in the invoice. Checks should be issued only after it is confirmed that you have received what you ordered.

Supplier invoice stamping is an important control to prevent double payment of suppliers. If you use accounting

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