Cash transactions might one day become a relic of the past. Many consumers nowadays prefer making purchases through credit cards, checks, and other non-cash modes because of the convenience they offer. Having your customer’s payments crediting reflected directly in your company’s accounts also helps during business loan applications.
Banks’ credit assessment team do assess bank statements for loan applications and the crediting transactions reflected in your bank statements will help ascertain your cash flow viability.
But for small business owners, especially those in the retail industry, a good number would still prefer cash transactions. Money is received instantly and transaction fees charged by card companies are avoided. But the flip side is, once you lose those bundle of bills (to theft, fire, or other unforeseen events), you can never replace those wads of cash.
Have you lost significant amounts of cash because of theft? How far have you gone in terms of changing the way you guard your most liquid assets? Maybe it’s time to change how you traditionally handle your cash. Break off from the mold and follow these simple steps.
Use surveillance and safety equipment
A published statistic showed that more than 75 percent of employees will have committed some form of theft from their employers at least once. To deter theft, many business owners invest in surveillance cameras that could help monitor possible inside jobs taking place in the workplace. The presence of these cameras sends the message that employees are being monitored round the clock and the mere thought of being “watched” could help abort “wrong intentions” including theft.
Apart from installing surveillance cameras at entry/exit points of your business premises, consider installing additional units in places where cash is regularly handled. These include the cash register, inventory storage space and other areas you deem critical. Position the cameras low enough for it to clearly capture the identities of people visiting or staying in these specific areas.
Use fire-proof safes to store cash taken out from the cash register. Also, use safety deposit boxes with locks when transporting cash from your vault to the bank.
Impose a buddy system
Counting, verification, safekeeping, and deposit of cash are some examples of activities that are best done in pairs. A buddy system works best because “someone else” is engaged in the same activity. No single person has complete control over an activity, thus reducing the temptation to steal.
You must design a cash handling process with this “pairing” system at the back of your mind. For instance, counting cash at the cash register at the end of the day is best done by at least two employees. The same goes for logging the amount of cash on hand at the opening and close of each business day. Apart from having two pairs of eyes monitoring each other’s “moves”, the buddy system also encourages teamwork which is essential for any business. Implementing a formal HR system to attract and retain talent will also help to build a healthy team culture in your company.
Require regular bank deposits
While it is cumbersome to drop by the bank each day to make a deposit, it does mitigate the probable risk of losing cash on any given day. The longer your cash lies in the register or cash vault, the higher the risk of it getting lost to theft or damage.
Setting the rules and asking your staff to make daily deposits isn’t enough though. You have to put these rules in writing. Create a cash management guide which every staff must follow. Make a detailed list, including the days of the week they are expected to make a deposit, the time of the day deposits are to be made, the amount of cash to be retained at the register each day, the person/s authorized to deposit, and other cash handling policies you wish to implement. Indicate consequences of infractions and accountability standards.
To help ward off potential thieves, some businesses authorize at least two employees to deposit cash on behalf of the owners.
Maintain reasonable amounts of cash on hand
There is no hard and fast rule on the reasonable amount of cash you should maintain in your cash vault. It depends on a lot of factors including how much money goes in and out of your business in a day. Take note of your actual monthly cash transactions. Use this info as a guide to determine how much cash on hand you should retain daily.
Once you have decided on the optimum amount of cash you should have on hand, state this expressly in your manual of operations.
Some businesses are comfortable with maintaining cash on hand equivalent to three to six months of expenses, including unexpected spending or losses. But there are business owners too who maintain cash that approximates more than six months of expenses. Their rationale for doing so is to have some extra cash for to take advantage of periodic COD discounts from suppliers.
Perform background and credit checks
According to a recent article on theft, a good number of employees who were caught robbing their employers of cash had an unexpected and pressing need for cash at around the time the offense was committed.
While there isn’t any guarantee that the best hires will never commit theft or errors in cash handling, a background and credit investigation could give you valuable information about a potential hire. A background check could unearth records of offenses and charges. It may also help ascertain if data stated in a submitted CV are true. Meanwhile, credit checks reveal bad debts or incidents of default. While these may not have any bearing on some job positions, it becomes highly relevant if the applicant is applying for a position where he’ll have access to your cash.
Also consider outsourcing business functions like bookkeeping to external accounting firm. Your bookkeeping firm can conduct monthly audits on your books and will serve as another layer of checks to mitigate potential employee theft of cash or inventory.
Of course, most employees are honest and you may have trustworthy employees under your wing for the longest time. However, this doesn’t mean you can lower your guard and compromise security. Analyze your cash handling process and never cease to improve on them. Look for possible loopholes and risks and mitigate them upfront since prevention is always better than cure.
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