Cash (1 of 3): Preventing Loss - John M. Leask II CPA/ABV, CVA


Part 1 of a 3 part series

Warning Signs:

    • Significant decrease in working capital.
    • Significant decrease in current ratio.
    • Significant decrease in quick ratio.

  • Sudden unexpected decrease in cash.
  • Cash below projected levels.
  • Delay in paying bills.
  • Lost cash discounts.
  • Excessive bank charges.

Steps to Improve: PREVENTING LOSS

  • Limit check signing to a person who controls cost, but does not do bank recs.
  • Open the bank statement and skim transactions, or control by budget exception.
  • Sign all checks or receive photocopies of all signed checks, where practical.
  • Start signing all checks personally.
  • If you can’t sign all checks, sign all those over a fixed amount.
  • Keep unused checks and checkbook under lock and key.
  • Watch out for unsound banks.
  • Be sure the funds in the company’s banks are within the federally insured limits.
  • Guard against losses from employee theft.
  • Institute strict check acceptance procedures.

Back to The Business Doctor

>>Cash (1 of 3): Preventing Loss
>>Cash (2 of 3): Speeding Cash Flow/Cutting Costs
>>Cash (3 of 3): Raising Cash/Increasing Cash Flow