Ocampo: Daily Cash Reconciliation


IT IS a best practice in cash management that cash collections be deposited in the bank on the day of collection or the following banking day. This will enable the business to optimize the use of cash instead of keeping them needlessly in the vault.

This business policy of immediately depositing the cash on hand in the bank has to materialize and should address violations or exceptions through a business process. This is best achieved by doing a “Daily Cash Reconciliation” - my brainchild when I was the finance manager of a multinational company.

Safeguarding cash collections and ensuring their immediate deposit in the bank is commonly done by the Accounting Section of businesses thru what is called the “Monthly Bank Reconciliation.”

However, a Bank Reconciliation is not enough to safeguard cash since it is done only at month-end. Hence, cash anomalies are detected only after a month. This will give the Cashier ample time to amass collections and prepare for his trip to retirement land. The Daily Cash Reconciliation will address this problem.

The “Daily Cash Reconciliation” is a daily report prepared by the Cash Accounting Clerk. It is submitted daily to the Accounting Head and the Finance Manager to inform them about exceptions or violations of the business policies on the collection and deposit of cash. The content of the “Daily Cash Reconciliation Report” is as follows:


It shows the date and the day of the month, i.e., from the first day until the end of the month. It is important to indicate the day to know if it is a banking day or not.

Collecting Unit/Sales Representative

The Collecting Unit or Sales Representative represents the source of the cash held by the Cashier. The Collecting Unit may include customers of a Project or a Branch or Sales Center that directly paid to the Cashier. The Sales Representative refers to the Company Salesman or Route that collected from customers and remitted to the Cashier.

Should Be Collection

“Should Be Collection” is the amount that should be paid by the customer/s or remitted by the Salesman that day. It is the amount committed to be paid that day by the customer/s as per the Installment Contract or Agreement. The “Should Be Collections’ that are to be remitted by the Salesman is the amount shown in the “Sales Settlement” process that day.

The “Sales Settlement”, typically used by dealers of products or by manufacturers who are also into selling of their products, is a system that accounts for the products taken out by a Salesman from the company warehouse as to whether they were sold on cash or on credit or brought back to the warehouse as unsold products.

Actual Collection

Actual Collection refers to the cash received and declared by the Cashier as the amount received from customers and sales representatives. It is shown in the Daily Cash Report (DCR).

Difference between Should Be vs. Actual Collection

The Difference of the amount between the Should Be and Actual Collection should immediately be investigated and reported. It is an indication of an anomaly or inefficiency in the performance of the duties of the Cashier.

Actual Bank Deposit

This column shows the amount deposited subsequent to collection date. An equally important information is when the collections were deposited. Collections deposited on a date other than the first banking day after the collection date should immediately be reported and investigated. They are indications of an anomaly or inefficiency.

Total Deposited

Total Deposited refers to the amount deposited after collection

date. The collection may have been deposited on various dates by the Cashier; and this situation is also an indication of an anomaly or inefficiency.


The Undeposited Amount as of the date of the Daily Cash Reconciliation Report is most likely a cash anomaly more than an inefficiency.

The undeposited amount, the difference between the Should Be and actual collection and the delays in the deposit of collections require that the Cashier explain said violations in writing. Repetition of said violations should they be due to inefficiencies or disregard of duties warrant a stern warning and suspension.

If said violations were found out to be anomalous, then said Cashier should be terminated. Retaining the employment of the Cashier is a business risk. The Cashier’s position is a position of trust and an embezzlement of collections no matter how small should not be taken lightly.

Imagine the Business Process done to convert cash to more cash that should earn the business a profit, i.e. from the procurement of raw materials, payment of production labor and indirect expenses, warehousing of the product, marketing of the product, sale of the product on credit until the collection of the credit – only to be embezzled by the Cashier. It is the worst cash management that could happen to a business because of trust issues.


Joselito R. Ocampo, a Certified Public Accountant, a Doctor in Public Administration and an Entrepreneur, is the iManaging 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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