5 Basic Cash Handling Principles and Procedures for Utility Providers

Cash

“Am I doing this right?”

“I know we’ve ‘always done it this way’ but why?”

These are the questions that run through the minds of cashiers and cash handlers in a utility company.  And that’s ok!  Why? Because there are answers to these questions!

Though policies may differ slightly between organizations, there are some general and specific cash handling procedures that can be implemented to improve – or maybe even explain – your cash handling processes. These basic principles for proper management of receipts fall into five areas: 1) establishing responsibility, 2) segregating duties, 3) restricting access, 4) independent verification, and 5) document procedures.

1. Establish Cash Handling Responsibility

  • Clearly Define Roles. Whether you have a large or small staff, each person must know exactly what their responsibilities are regarding cash handling. For example, John takes receipts and balances his drawer before 4pm each day, then Sally verifies his numbers and then takes the deposit to the bank each day. Even in small offices it is essential to make expectations very clear to each individual.

2. Segregate Cash Handling Duties

  • Duties should be segregated as much as possible. For example, the person recording the receipt should not be the same as the one making the deposit. Additionally, a person independent of the recorder and depositor responsibilities should reconcile the deposit to the general ledger. If there are only two people in the department, the reconciliation should be performed by the person collecting the receipts.
  • Know Cash Receipting Basic Principles.  No one person should be allowed to collect, handle or transport, and deposit checks/currency without additional controls to ensure that all funds are accounted for.
  • Keep detailed records. In a perfect world, a proper segregation of duties would ensure that the individual responsible for billing, updating accounts receivable records, or approving write-offs and adjustments does not have access to cash. In small offices this is not always feasible. In this case detailed record keeping is a MUST.
  • Federal funds reconciliation considerations. Reconciliation should be done of federal funds deposited to the amount shown by the federal government as paid to the agency. This reconciliation should be done by someone independent of the individual responsible for drawing down federal funds.
  • Separation of reconciliation and cash access. A reconciliation of receipts/remittance list to posted deposits should be completed by someone who does not have access to cash. One person should maintain custody of remittances until deposited.

3. Restrict Cash Handling Access

  • Cash Drawers, Operator Log In information, and Batches should be restricted to one user. Each user should have their own unique log in and password for Cash Receipting software.
  • Endorsements. Checks should automatically be endorsed upon receipt with “For Deposit Only City of XXXX” along with the date, amount of the check, and the name of the person who wrote the check. This process is automated in BMS Cash Receipting.
  • Keep cash/checks in a locked and secure area until they can be deposited. Access to the area should be restricted to only two people, one serving as a backup. If a person with custody responsibilities leaves their position, any keys should be collected or combinations changed. Remember that while cash or checks are in your custody you are responsible for it.
  • Petty cash funds should be properly authorized. Adequate physical safeguards should be maintained for all petty cash funds.

4. Independently Verify Cash Handing Operations

  • Verification. Total deposits can be verified independently by another person by accounting for each sequentially numbered receipt.
  • Credit cards. If sales are made with a credit card, a reconciliation of the daily summary from the credit card machine to receipts from till tape should be done by a person independent of operating the credit card machine.

5. Document Cash Handling Procedures

  • Maintain a log (preferably electronic) of all monies received. The log should contain the amount received, the name of the payer, purpose of the payment and its form (cash or check).
  • Provide a receipt. Ideally receipts should be pre-numbered and two-part. One copy should be provided to the payer while the other copy is kept on file (with BMS CR the copy is electronic and can be re-printed at any time).
  • Document your required processing steps. Create a list of rules/procedures for how to handle all aspects of the Cash Receipting process. Some good examples include:
    • Personal checks may not be cashed.
    • Deposits should be made on a daily basis if more than $500 is collected. Deposits should be made every Friday regardless of the amount collected. Proper safeguards should be maintained for protecting un-deposited collections.

What factors should be taken into consideration when selecting a Cash Receipting system?  Well, there’s time savings, accuracy improvements, robust reporting options, balancing assistance, payment controls, and real-time updates — and those are all offered by Black Mountain Software Cash Receipting software!  But we also continue to look for ways to improve the overall software experience while making it easier for local governments and clerks to comply with regulations.  One way we do that is by implementing features that prevent the unintentional ill-compliance of Cash Receipting regulations.

There are a lot of prickly details to remember when receipting cash — how to use your software shouldn’t be one of them! If your office doesn’t have centralized internal cash control, call our Sales team today to learn more about the benefits and features of Black Mountain Software’s Cash Receipting module: 800-353-8829.

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