The top 10 cash controls
Cash is King. That’s an old expression but it’s also one that still rings true today. Everyone likes cash even if we don’t carry so much with us personally anymore. It’s important to recognize that some people will help themselves to your cash if you let them. That might sound extremely clinical and you’re right it is, but it’s also a fact. The only way to minimize your risk is to have a set of controls in place to keep honest people honest and the less than trusty, on their back foot.
That’s what this piece is all about – keeping more of what’s yours and making sure it’s properly controlled. Cash controls are not complicated, but they need heightened awareness and a constant effort to be effective.
- Daily Mail:The payments you receive in the mail for receivables, deposits and any other miscellaneous activity need to be opened and recorded separately and independently from the person who will create the bank deposit and the posting to your books.
- A Log in Duplicate: For each day, money is received in the mail a separate log must be created. Noting the name of the payee, and amount of the check. The log must be copied and retained by the creator of the log and the original sent to the person who will make the bank deposit and enter in the books. This creates a separate and indisputable record of the funds received. Without this list things can be altered if the person making the deposit has complete control.
- Bank Reconciliations:Each month the bank accounts need reconciling. The reconciliation must be performed by someone other than the person who makes the deposits or creates the daily mail list. Reconciliations must include a list and the backup for all outstanding items. A simple printout of the account details and the bank statement is nowhere near enough. Read more on account reconciliations here.
- Petty Cash:Having cash on hand and available for local last-minute purchases is almost always going to be necessary. But make sure the funds are under lock and key and receipts are required for each and every transaction. Entrust the petty cash funds to one person and only reimburse that person for the sum of the receipts on a regular basis.
- Two signatures on all checks:The final act required before any funds are committed to is the signing of the check. An incredibly simple and important control is to ensure that each check requires two signatures. Signatories from a group A (GM’s side) and Group B (accounting department side) are necessary for any funds to be disbursed.
- Wire Payments:Wire payments are like a check. They should have two signatures and all back-ups must be presented at the time of signature/approval. Electronic tokens with unique codes must be used to release any funds and both approvers must use these tokens.
- Due Backs:All due backs must be prepared in duplicate and if possible processed by the general cashier. A copy of DB is to be included with the cash deposit and will be verified by the GC. When requesting the processed DB the employee must present the second copy. If processing by the GC is not possible due to schedules the DB may be sold to the duty manager or front office manager who will in turn sell it to the GC during normal GC hours. DB’s are considered cash when floats are counted as long as the corresponding DB has been verified by the GC.
- Cash Variances:An Accounting employee will match the actual cash counts with the Night Audit cash totals and calculate the cash variance for each cashier. The Director of Finance and General Manager jointly at their discretion will request hotel security to investigate losses when theft is suspected. Such a report will include all matters relevant to the cash variance. Disciplinary follow up is necessary when cash variances are found to be unjustified.
- Cash Responsibility Forms:Each float holder requires an approved and signed cash responsibility form. The forms are all to be located in a binder under the general cashier’s control. Any changes to floats require the amendment of the corresponding form. Under no circumstances are floats permitted to be transferred from one employee to another. When the float is no longer required, it must be returned to the general cashier and the form will be amended and removed from the binder. The sum of the forms must equal the cash on hand balance in general ledger.
- The Safe:Access to the main property safe is restricted to the Accounting Designate only. The combination to the safe is changed every time the Director of Finance/Designate/General Manager position turns over (new hire, vacation, etc.). Changes should be noted in a log. The emergency safe combination is split and sealed in two separate envelopes. One envelope is held by the Director of Finance and one by the General Manager.
If these controls are in line with your thoughts about managing your cash then I invite you to check out my full blown hotel accounting policy manual it has 33 sections and includes 550 separate policies; in addition there is a self-audit program. And, don’t forget to read the dos-and-dont's of the creation and use of your hotel accounting policy manual.
Happy controlling!
David Lund – The Hotel Financial Coach
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