Cash control

Cash control
See also

Cash Control is monitoring, managing credit and cash allocation. This control can be disruptive for spending ministries, add to procurement costs, and impose burdens on private sector suppliers. It is carried out primarily through a plan that establishes a relationship between the costs and revenues of the enterprise (the principle of self-sufficiency).

Functions of cash control

One of the most important functions of cash control are:

  • planning function
  • a function of forming the capital structure and calculation of its price;
  • development of investment policy;
  • working capital management;
  • financial risk analysis;
  • feature evaluation and consultation.

The planning function includes actions: development of financial strategy of the company, carrying out long-term and short-term financial planning; budgeting of the company. The second function includes: calculation of cost of capital; investment analysis and formation of an effective flow of reinvested profits and depreciation. In the third function, there are such actions: assessment of investment attractiveness of individual financial instruments, selection of the most effective ones; investment portfolio formation and management. The working capital management includes features such as identifying the real need for certain types of assets and determining their value; the formation of the structure of assets; improving the efficiency of working capital; control and regulation of monetary transactions. In the fifth function of cash control should identify a financial risks, analysis and forecasting of financial and business risks. The last function feature evaluation and consultation includes actions: formation of a system of measures to prevent and reduce financial risks; coordination and control of execution of management decisions within financial management; organisation of financial monitoring system, implementation of individual projects and management of financial results; adjustment of financial plans, budgets of separate divisions; consultations with the heads of the company's divisions and development of recommendations on financial issues.

Influence on cash control

Cash control can be depending on: the starting point-basic conditions; the infrastructure for rapid transfer; to reform cash practices – the willingness of authorities; the degree – including end-of-day bank account; organisational arrangements and capacity of human. The Bank controls the operation of each company, its financial position on the current account, as well as on the basis of analysis of its reports and balances. The Bank monitors the implementation of the production program, the use of material resources, and the expenditure of the wage Fund, the receipt of savings. If necessary, the Bank raises the question of improving its work before the Association (enterprise) and those bodies to which it is subordinate. In relation to enterprises that do not comply with savings plans, allow for extraordinary losses, do not care properly about the safety of their own working capital, the Bank can apply sanctions; transfer such enterprises to a special regime of lending and settlements. All enterprises, carrying out production and economic activities, enter into relations with other enterprises, organisations, institutions, employees and individuals. These relationships are based on various monetary calculations in the process of procurement, production and sale of products, works or services. All payments for the fulfilment of obligations and claims are carried out through the institutions of banks. Cash payments between enterprises are limited and strictly regulated. Cash at the enterprises can be in the form of cash at the cash Desk, stored in the Bank on current accounts, on special accounts, as well as used in the form of letters of credit, limited and other checks.

Cash control process

For carrying out audits of cash by the order of the head of the enterprise the Commission is appointed. During the audit, there is a complete exploded cash counts and verification of other values in the cash register. By results of check of cash Desk the Commission makes the act. When calculating the actual availability of banknotes and other securities at the cash Desk, cash, securities and monetary documents (postage stamps, state duty stamps, bill stamps, vouchers to holiday homes and sanatoriums, air tickets, etc.) are taken into account, the actual availability of securities forms and other forms of strict reporting is checked by their types (for example, shares: registered and bearer, preferred and ordinary), taking into account the initial and final numbers of certain forms, as well as for each place of storage and materially responsible persons. When at time of cash control it detects a revision of shortages or surpluses of cash or valuables in the cashier in the act indicates the amount of shortage or surplus, and the circumstances of their occurrence. Superior organisations in the implementation of documentary audits at all subordinate enterprises should audit the cash register and check compliance with cash discipline. At the same time, special attention is paid to ensuring the safety of money and valuables in the cash register.

Using of cash control

In a market economy should be based on the principle that the skilful use of funds can bring the company additional income, and therefore, the company must constantly think about the rational investment of temporarily available funds for profit. Now in cash control implies a variety of aspects of financial management of the enterprise. A number of areas of financial management received in-depth development and stood out in relatively independent scientific and academic disciplines:

  • higher financial calculations
  • financial analysis;
  • investment analysis;
  • risk-management;
  • crisis management;
  • valuation of the company.


Author: Anna Korovytska