17 Cash Handling Procedures YOUR Utility or City Office Should Embrace

Money cash

When a clerk is handling cash or other receipts and finds him/herself wondering, “What is the right thing to do in this situation?” or “Are there specific rules for this?,” it’s a sure-fire sign that training and/or procedural documentation is lacking.

When it comes to properly handling receipts, creating and maintaining a list of procedures and requirements are key to keeping books balanced, regulations honored, and questions to a minimum. Your cash handling list should be kept close by for quick reference and should be updated and re-distributed as new situations arise.

Very detailed instructions on basic procedures should be outlined for taking receipts, making deposits, and handling special circumstances such as NSF checks.

Examples of cash handling procedures your City or Utility office might want to document include these 17 points:

  1. Maintain a log (preferably electronic) of all monies received. The log should contain the amount received, the name of the payer, and the purpose of the payment and its form (cash or check). Black Mountain Software (BMS) Cash Receipting maintains this information automatically.
  2. 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. Total deposits can be verified independently by another person by accounting for each sequentially numbered receipt. BMS Cash Receipting maintains this information automatically.
  3. If cash or checks are received regularly in the mail, two persons should be present (ideally) when the mail is opened. The deposit slips should be reconciled by a third person to the general ledger.
  4. Keep transfers of cash from person to person to a minimum. Accountability is lost when several people handle cash before it is deposited. If a transfer must take place, be sure to document it. If you are the person of transfer, you should get a receipt, if you are the transferee you should verify what you are told you are receiving is actually what you are receiving before you provide a receipt. Use of a drop-off/pick-up log can be beneficial when transporting deposits.
  5. Restrictively endorse checks immediately upon receipt. For example, “For Deposit Only – City of [Your City Here]”. BMS Cash Receipting endorses checks automatically with the name, bank account number, date, and corresponding batch number.
  6. 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, keys should be collected or combinations changed. Remember that while cash or checks are in your custody, you are responsible for it.
  7. Make timely deposits. The sooner you deposit cash/checks, the less exposure to theft or loss of funds. Ideally, deposits should be made within 24 hours. If amounts are insignificant (less than $100) then deposits can be made weekly.
  8. Verify the deposit with deposit slips. Verify the deposit by agreeing cash deposit slips to the general ledger on a monthly basis.
  9. Segregate duties. If possible, duties should be segregated, meaning that the person recording the receipt should not be the same as that making the deposit. Additionally, a person independent of 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.
  10. Cash registers and credit card machines should be balanced daily. Over/short amounts should be monitored.
  11. Personal checks should not be cashed.
  12. Handle disputed receivables independently. All disputed receivables should be handled by an individual independent from those receiving payment.
  13. 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.
  14. Pre-number permits and licenses. If an agency issues permits or licenses, they should be pre-numbered. If pre-numbered permits, licenses, or receipts are used they should be tracked to ensure they are properly accounted for. Black Mountain Software’s Business Licensing module automatically numbers and maintains this information.
  15. Validate credit card transactions using till tape or reports. 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. Black Mountain’s software automatically  produces reports for reconciliation purposes, so till tape isn’t required.
  16. Reconciliation of credit card transactions should be done independently. A reconciliation of money deposited in agency’s credit card account to the daily summary from the credit card machine should be completed by a person independent of operating the credit card machine.
  17. Petty cash funds should be properly authorized.  Adequate physical safeguards should be maintained for all petty cash funds.

Whether your Cash Handling Procedures document is in a binder at the main counter or in a folder in your computer, keeping a list of procedures that can be easily referenced is a great tool for keeping cash handling processes running smoothly. 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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