Cash in my business? Still?
For those who may have forgotten, cash is that paper and metal money that you used to pay for items with ;-). Surprisingly, Cash in your business is still a reality in many businesses. We assumed that debit cards/zapper/ SnapScan, etc. would come into the world and take over. It may have gone “out of fashion” but cash is real and it is here to stay.
As much as the world thinks that we could do without it, it is not going to happen, we, therefore, have to deal with paper money.
Reporting cash in your business
Cash arrives in your hand in 2 ways:
- A withdrawal from an ATM
- Someone pays you for a product or service
Each and every transaction in business has to be recorded. This means cash too. The reporting of cash is actually simple. It is only simple if done regularly and correctly. As with everything that deals with accounting or tax, it only takes a few minutes of your time to record a cash transaction – if it’s done immediately. If not, it will take a lot longer and will result in problems with reporting.
Cash withdrawals
Reality (problems) versus (No problems = perfect)
- You have to renew an item (e.g. drivers’ license) but they do not take cards.
- Rush off to the nearest ATM and you draw cash. GREAT!
- Pay for the item. (You tell your accountant or record it somewhere.)
- Throw the slip in your wallet and forget about it. (You keep the slip for the records – take a picture and store it on your phone/computer.)
- At the end of the month (or when you do your accounts) and you cannot remember what that R1 000 was for! (NO PROBLEM)
Cash Receipts
Reality (problems) versus (No problems = perfect)
- Customer pays in cash
- You issue a receipt
- The cash gets put into your wallet and spent (you write it down)
- Sales are good but there are amounts outstanding. (Problem)
- Customer reminds you that he paid cash. You remember and your precious time is spent trying to find out where that cash was spent. (You refer back to your notes and all is good!)
Final words
In reality, it is simple and straight forward but it seldom happens properly. This money goes unaccounted for and this is reflected in the reporting and those reports are inaccurate.
Any amounts received or spent need to be documented and kept under control.
If not, it can become a major headache to sort out. More often than not this does not get resolved.
For more details about cash and how to deal with it, contact us
This post was updated on the 10th of February 2021