Companies receive the following forms of cash:

1.Physical cash

2.Cheques

3.Bank transfers

4.Mobile money

Qs: Another easy one to start the day, what are ways a company receives cash?

Consider two scenarios:

1)A small hardware shop receives only cash from customers. Cash is handled by the shopkeeper and placed in a locked box under the counter. Receipts are manually written out and provided to customers.

2)A solar water heater distributor accepts only bank transfers for payment for its products. Every payment can be traced back to an invoice, which are generated within their accounting system.

Which company do you think has the biggest risk of loss? Why?

ASK:  Which company do you think has the biggest risk of loss? Why?

The small hardware shop has a bigger risk of loss due to the handling of physical cash and the manually written receipts

1)Cash can be mishandled

2)Receipts can contain errors because they are done manually

3)Shopkeeper can steal – How do you think they can steal? Write a different amount on the receipt and pocket the cash

The solar water heater distributor has less risk for error as the invoices are generated automatically.  As payments are received electronically directly in the company’s bank account, there is less risk to misappropriate cash.

Accepting only physical cash is not ideal

Physical cash is not easily traceable and

    the risk of loss is higher.

Many small companies in Rwanda often accept only physical cash

However, Rwanda is moving towards a cashless economy

When possible, businesses should minimize physical cash received

Ask customers to pay by bank transfer, cheque, or mobile money

Controls over these processes are stronger and the risk of theft or loss is reduced