Part 2 · Running the business · Chapter 2.4
Cash and the bank
Draft: the wording may change.
The idea
Cash is a bucket. Small leaks — a ₹50 note short, a UPI payment nobody noticed, a cheque that bounced — do not show on any single day. By month-end the bucket is half empty and nobody knows where it went. The leaking bucket is found only by checking it every day: count the cash, match the bank.
Count the cash, every day
At closing, work out what should be in the drawer, then count what is.
| ₹ | |
|---|---|
| Opening cash this morning | 3,200 |
| Add: cash receipts today (counter and salesmen) | 41,850 |
| Less: cash paid out today (diesel, tea, loading charges) | 1,640 |
| Less: deposited in the bank | 40,000 |
| Should be in the drawer | 3,410 |
| Counted | 3,360 |
| Short | 50 |
Write the count down by notes and coins, sign it, and keep the sheet. A ₹50 shortage today is easy to trace: one receipt entered twice, one change given wrongly. A month of small shortages, found on the 30th, cannot be traced at all.
Rules that keep the bucket whole:
- Every rupee in gets a receipt; every rupee out gets a voucher. No "I'll write it tomorrow".
- Salesmen hand over collections the same day, with a list of receipts. Cash kept overnight in a bag is cash at risk.
- Deposit large amounts quickly. Cash in the bank is counted for you.
The law also limits how much cash a business may accept or pay in a single transaction or to one person in a day. Check the current limits on incometax.gov.in, and prefer UPI or bank transfer for large amounts.
Match the bank
Most money now moves through the bank: UPI, transfers, cheques. The bank statement is a second diary written by someone else (chapter 1.11). Match it line by line to your bank ledger at least once a week. The usual differences:
| In your books, not yet in the bank | In the bank, not yet in your books |
|---|---|
| Cheque deposited, not cleared yet | UPI from a number you don't recognise |
| Cheque issued to a supplier, not yet presented | Bank charges and interest |
| A cheque that bounced | |
| A retailer's direct transfer nobody told you about |
Each line on the right needs a document: a receipt against the right retailer, a payment voucher for charges, a reversal for the bounce. Each line on the left should clear in a few days; if it does not, chase it.
UPI from unknown numbers is the most common leak today. A retailer's son pays from his own phone. The money is in the bank, but no receipt is made, so the retailer is still shown as owing it. Ask salesmen to report every UPI collection with the shop's name, and find the owner of every unknown credit within the week.
Common mistake
Treating a cheque as cash on the day it is received. The receipt is entered, the retailer's balance drops, and he gets a fresh load on credit. A week later the cheque bounces. Now he owes the old bill and the new one, and your limit check was fooled. Record the cheque when received, but treat the bill as paid only after it clears — and when it bounces, reverse the receipt the same day.
Where you'll use this
In Part 3, van sales and beat collections bring cash, UPI and cheques from dozens of shops in one day. The daily count and the bank match are how a stockist knows which salesman's collection is short and which retailer really paid.
Check yourself
- Opening cash ₹2,000, cash receipts ₹15,000, cash payments ₹500, deposit ₹14,000. What should be in the drawer?
- A ₹6,000 UPI credit appears from an unknown number. What do you do?
- Why not treat a cheque as paid on the day you receive it?
Answers
- ₹2,500.
- Find who sent it (ask the salesmen, check the reference), then make a receipt against that retailer's bill. Until then it sits in a "to be identified" list, not forgotten.
- It may bounce. Treat the bill as paid only once the cheque clears, so credit limits are not fooled.