The definitive guide to Managing the Numbers
The definitive guide to Managing the Numbers
The definitive guide to Managing the NumbersThe definitive guide to Managing the Numbers

Chapter 8 – Managing Money

‘We were surprised how much our understanding of the business improved when we replaced cash accounting with accruals accounts, and the change was nowhere near as complicated as we feared it might be.’
A satisfied client

Overview

This chapter is primarily about keeping financial records and physically controlling bank balances, petty cash, expenses claims, collections, and cash flow. These are the nuts and bolts of managing the numbers. The real analysis comes later. Also introduced is a concept known as accruals accounting which helps with interpretation. The information about controlling the bank and cash balances is important for everyone, most of all for managers. As soon as financial responsibilities are delegated, there is an increased risk of sticky fingers in the pie. Managers should be especially aware of ways that corporate funds might be abused.

Mastering money management

After reading this chapter, you should be able to answer the following questions:

  • What is meant by bank reconciliation? Why is it so important?
  • Why is it important to use vouchers when keeping financial records?
  • What is the imprest system of cash management? What is so great about it?
  • How would you go about projecting your cash flow?
  • What are cleared and available bank balances?
  • How can you best manage expenses claims?
  • How do you anticipate bad debts? Collect efficiently from clients?
  • How do you avoid cheating? What are good rules for managing cash?
  • What is the difference between cash and accruals accounting? What is most useful for a manager?
  • How do you post accrued and prepaid expenses?
The Definitive Guide to Managing the Numbers