January 29, 2022


Accounting + Finance Blog

Five Ways Small Businesses can Control Cash

Five Ways Small Businesses can Control Cash

Cash is an important part of every business. If not carefully managed it might be spent by impulse. Also, it might be lost or stolen by employees. Although it is important to trust employees in a small business, failing to put necessary cash control in place might be disastrous. In this article, let’s explain five controls for cash.

An accurate record of cash transactions.

The first important control is keeping records of cash transactions for the small business. The first step is to ensure that all cash transactions have source documents. A simple receipt and payment vouchers can help. Receipts will be used when cash is received from a small business. And a payment voucher is used when cash is paid out.

Payment vouchers should be fully authorized by the authorizing officers before they are paid. This will serve as a control measure to reduce stealing by employees. Aside from using source documents, there should be accounting records in the firm. Although there is nothing wrong with manual bookkeeping, it is advisable to use a computer-based system. A simple spreadsheet may save you a lot of headaches. However, accounting software is easier to use.

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Monitor Cash Vault.

The small business must have a policy on the maximum amount of money that can be in its till or vault. Any amount above it must be banked. Keeping too much cash in the office is not ideal. Therefore, the business owner must set cash limits within the firm. He should also monitor this daily. This is a control measure. If the responsible employee does not comply with this policy, then the business owner will be aware and give sanctions. In addition, at the end of every month, a cash count should be done. This is to ensure that the amount in the cash till or vault is the same as that in the accounting book.

Cash Control by Employee rotation.

When there is a collaboration among employees, it is easy to move money out of the organization. As a control method for cash in small businesses, it will be necessary not to allow the same employee to have access to cash for a long period. From time to time, it will be necessary to replace a staff handling cash. An employee from another department can be used to replace the cashier. This will help reduce collaboration between the cashier and other employees.

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Cash Control through Audit trail.

Another area small businesses can control cash is auditing. This cannot be overemphasized. Carrying out an audit trail means examining the business records from source documents up to the financial statements and vice versa. It will help uncover errors during posting to the accounting system. Furthermore, it helps ensure that accounting processes and policies are followed by staff.

Segregate job.

Indeed, small businesses cannot employ enough workers and may not have the finance to employ professionals. However, segregation of employees to different tasks dealing with cash can help reduce thieves and errors. One employee receives the cash while the other posts the transaction in the accounting system. Also, there should be a limit to the amount of cash a receiving officer should hold at any time. Any excess of this should be moved to the cash till or vault.

Why Cash Control is Important

It ensures there are accounting records of all cash transactions. This does not only help keep the employees in check but also complies with regulatory requirements by the corporate affairs commission (CAC) of Nigeria.

Management can ensure that there is a sufficient amount of cash at all times. When cash is controlled only acceptable limits are within the small business vault. Therefore, there will be just enough money to meet daily operations.

It will reduce keeping excessive cash in the business. Any excess money goes to the bank. This fund can be invested in other stuff like a mutual fund or fixed deposit or call account. Thereby generating more profit for the entity.

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Cash control in small businesses will save employees from suspicion and harassment that results from loss of money through theft and fraud.


So far, I have explained five ways small businesses can control cash. Entrepreneurs need to keep an eye on their organization’s cash. To do this efficiently several controls must be put in place. If accounting policies and control measures are in place, the entrepreneur can leave the office for months without the fear of theft or fraud. This also helps comply with the regulatory requirements of a country.