Cash Tracking For Fun And Profit

By Cynthia L. Finkenbinder

     Cash is the only official legal tender in the United states. Cash consists of both coins and paper money, also known as banknotes. Despite this, most businesses prefer to deal with checks and credit or debit cards. No, those are not considered legal tender, simply because there is a delay in transferring the money. Anyone who has ever dealt with a bounced check, or a credit card that someone disputed, has experienced this delay in action.
     So why do businesses in general not like cash? Cash brings up all kinds of problems such as security, employee theft, and even counterfeits. In the case of large cash transactions, it also brings in a little-known tax form that must be filed for every transaction over $10,000. Cannabis businesses however are typically cash based, so cash tracking is an important concept to master.
     Security Is Not a Product, But a Process
     The Oxford English Dictionary defines security as, “the state of being free from danger or threat.” Since that is not possible in the world we live in I prefer the Collins English Dictionary definition, “all measures that are taken to protect a place or ensure that only people with permission enter or leave it.” Most states already require cannabis businesses to have heightened security in place, but that is just to protect against unauthorized use of the plants and product. I have been in facilities that have more security cameras than ever needed to see the plants and manufacturing area from every angle possible. Then they nearly overlook their offices and often, there are very few, if any, cameras in those areas. I have even been in facilities that do not even have a safe for their cash, there is often a safe for the plants, but not the cash! They rely solely on a locked office door or desk drawer!
     Security of the money should always start with the way it is handled when it is received or used to pay someone. In this case, we can learn a lot from how banks handle money. The customer first counts the money and tells you how much is there. The one receiving the money then counts it and confirms it is the amount specified. If it is a large amount, then a third person also counts it, or they use a machine to count and sort the money or coins to once again confirm the amount. If at any time the counts don’t match it is re-counted until everyone agrees on the amount. This should be part of your procedures manual along with the amount threshold that requires a third person to verify.  These steps not only confirm the amount, but it also prevents theft.
     Keepin’ It Real
     Make sure you are well versed in how to spot counterfeit money – and make sure your employees have been thoroughly trained to spot counterfeits as well. Henry Ford once said, “the only thing worse than training an employee and having him leave is not training them and having them stay.”  https://www.uscurrency.gov/ is a great website to start training your employees. It even has a place to report counterfeit money and a free training course that includes a test.
     The Money Needs a Safe Space
     After the money has been counted it needs to be kept in a secure location. Even if you have a reliable bank, you still need a secure on-site location to store cash because you cannot just drop everything to run to the bank multiple times a day. First get a safe and make sure it is big enough and heavy enough that it can’t just be picked up and taken away in the thief’s car; and permanently bolt it down to the floor. If possible, get a safe that has multiple security codes and tracks when those codes are used to access the contents. When transporting money, make sure it is secure. There are companies that specialize in picking up your cash and taking it to the bank for you. If you or an employee transport the cash instead, make sure to use different routes to the bank each time and have a secure location in the vehicle to keep the cash while on the road.
     Show Me the Money
     Now that you know your money is real and it is secure, the next step is keeping track of it. In your accounting software, you will need an account called Cash – I recommend having two accounts for most of my clients. The first one is a petty cash account – this is the money the bookkeeper or manager can use to pick up small items or pay smaller bills – usually an amount under $200 or so, and is tracked with a written notebook where they enter every time that cash is spent or added too. Then once a week, or in some cases once a month that log is scanned in and the accounting software updated to reflect those transactions. It should also get verified at least once a month to make sure that the ending amount on the log matches the physical count of the money. This works like having a cash register in the office.
     The other account is a safe account – this is to track how much money is actually in the safe and we use the same verification process as for the petty cash. Sometimes these logs get kept in a spreadsheet, but I have found people normally think they will remember and don’t want to go through the process of opening the spreadsheet every time – a written record also will have the initials and the handwriting of the person taking the money in or out giving you better accountability.
     We then come to filing out an obscure document, that is, the 8300 form. This is the least understood form because very few people even know about it. It is normally used in casinos, but it is required any time any business accepts cash payments where the amount is over $10,000.00. This form must be e-filed through the BSA e-filling system at https://bsaefiling.fincen.treas.gov/main.html, which is the Financial Crimes Enforcement Network. You are essentially telling them that you received the cash for a legitimate business reason. It must be filed within 15 days of receiving the cash. In this case, they also include money orders and travelers checks in the definition of cash.
     Basically, if you receive cash from one person or entity over $10,000.00 in any 24-hour period you must report it on the 8300 form. That means if they give you $5,000 at 4PM on Monday then do a second payment of $5,000 at 3PM on Tuesday you are on the hook for filling this form. This form requires some interesting information; including the name of the person receiving the money – who it was from and who the actual person delivering the money including their social security numbers and their dates of birth – even if they’re only a courier who has no connection to your business or the one making the payment. Make sure that this form is included in your procedures manual for handling cash.
     For more information on tracking cash in your business we will be having a webinar on November 1, 2017, at 3PM Mountain time – to register go to http://www.alphaomega-acct.biz and click on events or go to our Facebook page to register.
     Cynthia L. Finkenbinder, CPA is the owner of Alpha Omega Accounting, LLC in Northern Colorado. With clients in 26 states and five countries, she is an expert in 280E compliance, accounting and multi-state taxes. Feel free to contact her if you have any questions or would like us to address your question, or are in need of her professional services, at info@alphaomega-acct.biz or visit her website: http://alphaomega-acct.biz and follow her on Facebook at https://www.facebook.com/Alpha.Omega.Accounting.LLC/.