Without cash, you don’t have a business. You have to have cash in the business to make things work, and that means it’s vital to have the right tools in place to control the movement of cash, without interfering with people’s ability to get the job done.
So, let’s look at the six main cash control tools that you will have available in your growing business, and what you should know about them.
Bank signatories
Bank signatories are the people trusted to access payments via the bank. Normally, this will be a group of people from which two (or sometimes more) may sign to authorise a payment.
Having a group of signatories is useful, because if someone is absent, they don’t interfere with getting payments made. And if you know that your signatories won’t be available when a payment is due, you can arrange to have them make a pre-payment agreement.
Note: It’s a bad idea to have only one bank signatory. You can do it, but it’s a recipe for fraud and accidental damage to the business by delays caused by absences.
Company credit cards
Company cards are useful for automating payments, so that regular expenditures can be debited from the company account every month without generating a ton of administrative work.
The downside is that credit card details are vulnerable to fraud. Credit card fraudsters are practiced at getting the most out of stolen details – they tend to make small, but regular, transactions to try and avoid any triggers you might have built in for larger transactions.
Cardholders and the finance department should have a system in place to audit and review all credit card charges regularly, to get in front of any fraudulent activity before it becomes damaging to the business.
Petty cash
It’s 2022, petty cash is no longer necessary control in most businesses. You can order almost everything you need online and pay for it with a card.
If you must have a petty cash float, keep it small, have strict rules on its use (and what it may not be used for) and regularly audit the petty cash to ensure that’s what it’s being used for.
I recommend eliminating petty cash, in favour of credit card tap and go, wherever you can.
Expenditure authority limits
Not all businesses need these, but as a business grows – there are usually many people who need to spend money to get their job done.
This can include, for example, sales staff who may need to entertain customers or spend nights in hotel accommodation.
An expenditure authority limit sets a limit on how much money each employee may spend before they must seek permission from a senior member of staff.
These limits should be defined in a written policy, and care should be paid to ensure that they are not so restrictive that they interfere with people getting the job done.
Expense reports
Everyone hates them, but they’re essential to controlling cash. An expense reporting policy should be in place, and reports should be timely and audited to ensure their accuracy.
Bank account reconciliation
All your accounts should be reconciled every working day. Any transactions which appear dubious must be investigated immediately (and this is easy now in the age of online banking) and followed up on.
There’s no reason not to be in control of your cash transactions in 2022.
Final thoughts on cash control tools
Cash control is vital to the success of your business. You don’t need to become a tyrant to get this done – just use the cash control tools above.
