Cash Management Especially Important In Busy Season
Originally published: 06.01.07 by Ruth King
Vigilant oversight stops shortfalls.
The busy times have come. Your technicians are working overtime to handle customers’ needs. Instead of closing replacement sales based on the quality and reputation of your company, you are closing sales by agreeing to, “You can have the job if you can get it done tomorrow.”
You have so much work to do that you don’t know how you are going to get it all done. You’re relaxing because cash is plentiful.
Don’t relax too much.
This is the time when petty theft often starts. The thief’s thinking is, “No one will miss the $10 from petty cash.” The excuse? “I just forgot to get a slip,” or, “The slip got lost because there were so many this month.” You might think this is a plausible excuse because it is so busy.
Not acceptable. Why? If someone gets away with theft once, they will get braver and more brazen the second time. If your employee gets away with it a second time, you’ve established a theft pattern that will be difficult to detect.
What’s $10? Assume that it is $10 per week or $520 per year. If you don’t catch it for two years, that is over $1,000 of your hard-earned money that someone has embezzled. Granted, that might not seem like a lot of money (I’ve seen embezzlements in the hundreds of thousands of dollars). However, $10 per week over two years is still over $1,000 of your money that has been stolen.
A very wise person once told me: “The job of a good embezzler is to become the trusted bookkeeper.” You should never totally trust your bookkeeper. Always check!
Paying strict attention to cash in busy and slow times keeps honest people honest. When you get lax, honest people get tempted and can start a pattern of theft.
Here are five activities that you must do to protect your cash, especially when you are very busy:
1. Make sure that the paperwork for all financed jobs is submitted. When you are busy, it is too easy to not go back to the customer’s home to get the financing paperwork signed. You have another lead to go on and forget for a day. This pattern gets repeated, and soon it is months before you remember.
Checks and balances must be in place. Every job must be billed, and the easiest way to do this is to maintain a list of job numbers, job names, and billing dates. The list can be computerized or can be kept on a simple clipboard that the bookkeeper updates. The important thing is that the bookkeeper should be able to see at a glance whether jobs are completed and billed, as well as whether payment has been made and the money deposited.
2. Make sure that the person receiving the checks from your field personnel notes on the paperwork that he or she received it. True story: A company owner was walking through the parking lot and noticed a piece of paper floating by. He caught the paper, and it was a customer’s check! The owner locked the check in his desk and decided not to say anything. He wanted to see what would happen. A few days later the bookkeeper came to him and said, “John says he turned in the check with his paperwork. I didn’t see a check. What do you want me to do?” The owner pulled the check out of his desk drawer.
From that day on, all technicians were issued staplers and required to staple the checks to their paperwork. In addition, the person receiving the paperwork noted on the service ticket that she had received the check. By doing this, you will know the money flow.
3. Stamp checks “for deposit only” and with your account number as soon as you get them. This helps to ensure that the checks are deposited into the account that you designate. If someone walks into the office and steals the checks (It’s happened!), the stamped checks will be much more difficult to cash. And, if someone has set up a checking account with a similar-sounding company name (It’s also happened!), it will be difficult to deposit those checks in that account.
4. Save 1% of all cash that comes in the door. This is your rainy-day fund. At this time of year, you won’t miss the 1%. Every time you make a deposit in your checking account, have your bookkeeper write a check for 1% of that total and deposit it in your savings account.
5. Complete weekly cash-flow reports. This lets you see how much cash and receivables have come in during the week, as well as what the disbursements were for the week. It also allows you to plan for the following week’s inputs and outflows. See an example of a weekly cash flow report at the HVACR Business online download center, www.hvacrbusiness.com/downloadcenter.)
The weekly cash flow report can provide the first clue that someone is stealing. If you expect to see a certain amount of cash posted, and you don’t see it, ask questions. If you expect to see a certain amount of receivables (or credit card payments) recorded, and you don’t see it, ask questions. Make sure you personally verify the amounts on the report at least once per month. This is the best way to keep the honest people honest.
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