You are a business consultant providing information and advice to future small business owners. Controls are especially important with respect to cash. Explain the importance of cash control and make recommendations for procedures that could be implemented.
Cash control is an important factor for success of a business as it involves managing how cash is allocated as well as credit acquisition and disbursement of funds. It is essential for business finances to be managed and budgeted as this prevents a business from failing. Cash control is important to a business in a number of ways:
- Theft prevention. When a business is not well organized on how they handle their cash, it may lead to employees stealing from the business (Salas-Molina et al, 2018). It is easy for dishonest individuals to notice how you manage your funds and identify loopholes. Cash control is important in preventing fraud where an employee, customer or creditor may forge documents to steal from the business.
- Cash control helps to save time that would otherwise be used to double check all accounts and balances. It also saves money that would be used to acquire labor for various accounting activities.
- Cash control helps to maintain liquidity of a business. Liquidity is important to ensure successful day to day operations (Thibierge & Beresford, 2015). Cash is the most valuable liquid asset of a business and therefore it is important to control it.
Cash Control Recommendations There are a number of procedures to ensure enhanced cash control. First of all, the management should ensure clear separation of duties (Thibierge & Beresford, 2015). Depending on individual skills and expertise..