5 reasons to keep a cash book

Do you want to use a cash book to efficiently manage your financial activities and cashflow? In this article, you read 5 reasons to keep a cash book for your company.

What is a cash book?

A cash book is a financial journal that records all cash receipts and payments, including bank deposits and withdrawals. It serves as both a ledger and a journal for cash transactions, helping in accurate tracking and management of cashflow within a business.

The necessity of keeping a cash book

Owning and operating a business, means you need to keep accurate track of the finances. Everything coming in and going out, has to be administrated. Especially cash payments and little amounts, which afterwards you can’t retrieve. Keeping up all financial activities will help you in the long term to trace and explain certain transactions. Read why the cash book is a crucial item in your office.

1. Financial control due to the cash book

Keeping up a cash book helps you to keep control of the financing. By writing down every financial activity, big or small, you continuously have an overview you can consult at any time. For the record, you must save all receipts of cash payments from which you don’t have a digital record. To keep all the receipts, it is convenient and efficient to link a cash register system to an online cash book. Thanks to the structure of the cash book, you can note every detail of the transaction. At the end of the month, you can add up all debits and credits, so you can calculate the cashflow, budgeting for the next period, and improve your liquidity. 

2. Transparency and accountability

If you collect all the financial information of your company in one cash book, you have a clear overview in one place. This helps you to be transparent and hold accountability for the actions you or employees do.

3. Purposes during taxes

In order of tax returns, it is crucial that you provide evidence of cash expenses and income. This helps in meeting tax obligations and avoiding problems with tax authorities.

4. Cash book as part of making decisions

Managing a company means you need to make important decisions that can affect the cashflow. When you constantly keep up the cash book, and you have every financial information in one place, you can make accurate, well-thought decisions according to the budgeting and financial health of the company.

5. Cashflow management

Keeping up every payment every day, helps you in the long term with better cashflow management. Would you, for instance, forget to note a cash transaction, later on it will be difficult to trace exactly where the money came from or what the payment contents. Therefore, it is important to keep the cash book ordered. If possible, you can give each cash entry a consecutive number that refers to the cash transaction that took place.

Is a cash book obligatory?

Does your company work with cash? Then keeping a cash book is mandatory. Businesses that work exclusively on an invoice basis and do not receive or pay with cash, are not obligated to keep a cash administration. In that case, however, it is important to keep an account book of the transactions that go through the business account.

Cash administration digital or on paper?

As long as you accurately keep up your financial activities, you’re free to do it in a paper cash book. On the other hand, we highly recommend you to use a digital cash book. The main reason is that a cash register system can be linked to a digital cash book, which reduces the risks of making calculation mistakes.

An online cash book as part of a cash management software is highly efficient. The chance of errors is minimum and, moreover, the cash administration forms an immediate part of the complete bookkeeping system. This is useful because with one click all the data for the VAT return, for example, is revealed and organized.

Keeping your cash book with Payt

Do you need help in keeping up the cash book of your company? We like you to discover our efficient and convenient management software for your financing. Try out or free demo or contact us for more information.