If you receive cash payment from your customers - typically retailers, you most
likely need a cash register in order to keep track of the numerous daily
payments. But a cash register alone does not do the job.
All retailers have a daily turnover in terms of a combination of cash, cheques, and credit card transfers.
So, besides a cash register, you must employ a routine of registering the money from it leaves your cash register until it is safe in the bank. As well as registering cash out of the cash register, if any.
In practice, this would typically be a cash account (paper) or a computer based accounting system kept as part of the day-to-day operations.
Many companies never receive cash payments. They handle all income and expenses exclusively via their bank account. Such companies do not have the same need for a daily registration routine as retailers do. But they still need a routine adjusted to their size and format.
A wholesaler (selling to other companies), probably rarely or never receives
cash payments. Still, there will be numerous daily order executions, sales as
well as purchases. Sales are probably credit sales, which must obviously be
registered to ensure that the company recovers all its outstanding debts.
Such a company is very dependent on a daily accounts routine modified for its business practice.
For a minor consulting business with no staff except for the owner daily routines will be rather simple. There might be days or even weeks between the invoicing. However, such minor businesses also need proper routines, otherwise the accounts won´t come right.
The best to do is to discuss the matter with your accountant before you start
up. This is particularly relevant for companies with daily sales and/or purchase
operations. They must establish proper routines that are not too unmanageable
from day one.
Your accountant is an expert in this field as s/he, besides his/her education, has hands-on experience from numerous other companies.
- Go to next business issue: Purchase-, Sales- or Payment Transactions
Luck favors the one who is well prepared.
- Søren Hougaard, Danish professor in Entrepreneurship