Ocampo: The Cash on Hand should be in the bank

CASH on Hand is a business asset in the form of bills, coins, and dated checks held by the business cashier that were received from all sources of receipts, including cash sales and collection from customers' accounts.

Collections that are still in the possession of the Sales Representative for which an Official Receipt and a Cash Sales Invoice has been issued, but which have not yet been remitted to the Cashier as of Balance Sheet date, are not part of Cash on Hand.

These unremitted collections are short remittances and are the accountability of the Sales Representatives. It is an acceptable practice that the Cashier handle several funds.

What is important is that these funds are not be mingled. For example, a Cashier can accept and handle collections of several affiliated companies including a Petty Cash Fund.

However, the cash collections for each business and the PCF should be physically separated using boxes or pouches.

Cash on Hand in itself does not serve any business purpose. Keeping then inside the company vault makes these money worthless, and will not earn a centavo for the business.

In fact, the money is even susceptible to risk of loss due to embezzlement and robbery. Hence, it is a basic cash management policy that cash collections should be deposited in the bank the following banking day.

Cash collections that are in the vault due to long holidays such as during the Holy Week where collections during Holy Thursday, Good Friday, Black Saturday, and Easter Sunday are all in the vault and can be deposited only on Monday the following week.

If the total collection during these four days amount to millions, then this is an opportunity for the Cashier to embezzle and abscond bringing the millions of cash to holiday land. It is more than the retirement pay he will receive.

Another risk is the possibility of robbery. Holding a large amount of cash collections especially in remote sales offices will expose it to robbery and endanger the safety and lives of the staff.

An incident happened in a sales office in Alaminos, Pangasinan that was robbed of its cash collections after its personnel were rounded up, placed in the comfort room, sprayed with tear gas, and killed like pigs using a butcher's knife.

Auditors conducting a count of cash collections should count the cash quickly then go out of the Cashier's booth to avoid any untoward incident. It is for your own safety.

So never think that it is a good business practice to keep cash collections for too long in the business premises. It is best to put them in the bank immediately. Cash will start earning for the company if they are in the bank either in a savings or current account.

If they are in a savings account, they will earn interest no matter how minimal the earning is. If they are transferred from a savings account to a current account, then it means that an incoming check that will clear the following day is being funded.

Funding a clearing check will avoid a bouncing check that will cost the company more than a thousand pesos as bank charges.

When an amount of Cash on Hand is reported in an Accounting Schedule, it means that said amount is inside the Cashier's vault waiting for deposit the following banking day.

A reviewer of the Cash on Hand Schedule, whether be it the Finance Manager or Auditors, can prove the correctness of the recorded Cash on Hand by checking its subsequent deposit.

If the recorded Cash on Hand is not deposited the following week, then it is possible that it may either be malversed or the Cashier is negligent. The best way to substantiate the balance is to conduct a surprise Cash Count immediately in the morning before the collections are deposited in the bank.

To ensure that "Should Be Collections" are collected and deposited in the bank the following banking day, the Cash Accounting Clerk should prepare a "Daily Cash Reconciliation Report".

The said report compares "Should Be Collections" with collections received by the cashier and with what was deposited in the bank the following banking day/s.

It is a comparison of the Sales Remittance Report (Should be Collections), the Cashier's Daily Collection Report (Actual Collections) and the Bank Validated Deposit Slip or Passbook (Actual Deposit).

This Cash Reconciliation procedure should be done daily to immediately identify cash anomalies. Doing the Bank Reconciliation will also show cash anomalies; but this will be too late as the Bank Recon is done only at month-end.

Cash on Hand should be in the Bank. Once in the bank, cash is then available to pay either Operating and Capital Expenditures, invest excess cash or pay for the cash dividends of stockholders. Payment of Operating and Capital Expenditures will grow the business.

Payment of cash dividends will make stockholders happy.


Joselito R. Ocampo, a Certified Public Accountant, a Doctor in Public Administration and an Entrepreneur, is the Managing Director of J.R. Ocampo Consulting and Professional Services. He is a former Internal Auditor and Finance Manager of Coca-Cola Bottlers Philippines, Inc. for 20 years, and a former Senior External Auditor of Sycip, Gorres, Velayo & Co. for 6 years. He also served as City Councilor of the City of San Fernando, Pampanga for 2 terms. He is a former teacher and is now a Trainor of Business and Finance courses. For queries and comments please call 0917-5057341 or e-mail at


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