10 Ways to Keep an EYE on Your Company’s #Cash

eye-on-cashDo you regularly monitor your company’s cash accounts? Being aware of where your cash is going can help prevent theft or improper expenditures, which are among the chief sources of loss for small companies.
What can you do to reduce the risk of losses? The textbook answer is to implement “internal controls.” Internal controls are standard procedures for assuring the integrity of your financial processes. For example, segregation of duties, such as having more than one person involved in preparing, signing, and reconciling checks, is an internal control.

Here are suggestions for safeguarding your company’s cash.
● Make sure all invoices have an approval signature before being paid.
● Personally verify that new vendors exist.
● Require sign-off of employee expense reports by a higher-level employee.
● Don’t permit the person who prepares a company check to sign that check.
● Consider requiring two signatures on checks.
● Maintain a list of void checks and compare them to your bank statement.
● Use a bank stamp to endorse checks immediately upon receipt.
● Personally open bank statements and other mailings from the bank.
● Review and reconcile your bank statement regularly.
● Monitor online access to your business account.

Please contact our office for details or for assistance in improving controls over your company’s cash.


Are bad business debts a tax deduction?




If you’re in business long enough, you’ll run into a customer who doesn’t pay you. Despite your best efforts, you may conclude that you’ll never receive the money. Do you have a tax-deductible bad debt? The answer depends in part on whether you operate your business using the cash or accrual method of accounting.
Cash. When you use the cash method, you report taxable income when you receive it and deduct expenses when they are actually paid. While this makes your bookkeeping simple, you get no direct deduction for a bad debt. Since the income was never received, it was never reported or taxed. However, you will still be able to indirectly deduct the labor, merchandise, and overhead used to provide for the goods or services that were delivered but not paid for.
Accrual. Under the accrual method, you report income when you send an invoice to the customer. Expenses are deducted when they are due, regardless of when you pay them. This method is more complicated than the cash method, since you must track accounts receivable and accounts payable. However, because you report taxable income when you bill your customers, you have a bad debt deduction that you can claim as an operating expense if your customers fail to pay.
For more information about accounting for bad debts, contact us.