Cash receipts procedure

The process of receiving cash is highly regimented. This is because the task of processing checks is loaded with controls. They are needed to ensure that checks are recorded correctly, deposited promptly, and not stolen or altered anywhere in the process.

The procedure for check receipts processing is outlined below:

  1. Record checks and cash. When the daily mail delivery arrives, record all received checks and cash on the mailroom check receipts list. For each check received, state on the form the name of the paying party, the check number, and the amount paid. If the receipt was in cash, then state the name of the paying party, check the “cash?” box, and the amount paid. Once all line items have been completed, enter the grand total in the “total receipts” field at the bottom of the form. Sign the form, and state the date on which the checks and cash were received. Also, stamp “for deposit only” and the company’s bank account number on every check received; this makes it more difficult for someone to extract a check and deposit it into some other bank account.
  2. Forward payments. Insert all checks, cash, and a copy of the mailroom check receipt list into a secure interoffice mail pouch. Have it hand-delivered to the cashier in the accounting department. The cashier matches all items in the pouch to the mailroom check receipt list, initials a copy of the list, and returns the copy by interoffice mail to the mailroom. The mailroom staff then files the initialed copy by date.
  3. Apply cash to invoices. Access the accounting software, call up the unpaid invoices for the relevant customer, and apply the cash to the invoices indicated on the remittance advice that accompanies each payment from the customer. If there is no indication of which invoice is to be credited, record the payment either in a separate suspense account, or as unapplied but within the account of the customer from whom it came. In the latter situation, make a photocopy of the check and retain it for application purposes at a later date, so that the check can still be deposited on the current date.
  4. Record other cash (optional). Some cash or checks will occasionally arrive that are not related to unpaid accounts receivable. For example, there may be a prepayment by a customer, or the return of a deposit. In these cases, record the receipt in the accounting system, along with proper documentation of the reason for the payment.
  5. Deposit cash. Record all checks and cash on a deposit slip. Compare the total on the deposit slip to the amount stated on the mailroom check receipts list, and reconcile any differences. Then store the checks and cash in a locked pouch and transport it to the bank.
  6. Match to bank receipt. Upon receipt of the checks and cash, the bank issues a receipt for it. Someone other than the cashier should compare this receipt to the amount on the deposit slip, and reconcile any differences. It may be useful to staple the receipt to a copy of the deposit slip and file the documents, as proof that the matching step was completed.