The first setup step of the finance module is cash and bank definitions. It looks simple, but it is one of the most tedious definitions to change later.
A cash structure set up incorrectly turns into a scenario months later where the question "where did this money go" cannot be answered.
In this article, we explained how to set up cash and bank definitions, how to enter opening balances, and common mistakes.
Table of Contents
How many cash registers should be defined?
A cash register is defined for every point where physical cash is present. A single "general cash" definition is insufficient for most businesses.
In retail, every cash point must be defined separately. Otherwise, it cannot be found which cash register has a discrepancy at shift closing; cash movement and end-of-day closing check out the article.
If the field team collects payments, a representative-based cash definition is required. The cash held by the representative must be tracked separately from the office cash.
In a multi-branch structure, each branch has its own cash register. The headquarters sees a consolidated view, while the branch manages its own balance.
Multiplying the number of cash registers unnecessarily also creates problems. The rule is simple: every point counted separately physically is a separate cash register.
Defining bank accounts
Each bank account is defined separately. If you have multiple accounts at the same bank, each one must be a separate record.
The definition must include the IBAN, account number, branch, and currency. Entering the IBAN correctly is critical for statement reconciliation.
Credit card and POS accounts must also be defined separately. POS collections are transferred to the bank account with a different value date; this difference must be tracked.
If you are going to set up automatic statement retrieval, account matching is done through these definitions; see the bank integration article.
Foreign currency accounts
Foreign currency accounts must be tracked in their own currency. A foreign currency account kept by converting to its TRY equivalent does not show the true balance.
Each account must have a main currency. Keeping both TRY and USD transactions in the same account creates confusion.
Exchange rate differences are evaluated periodically. Clarify how to perform this operation with your financial advisor.
Foreign currency account management in businesses that export requires a separate discipline; we touched upon the exchange rate side in the e-export invoice article.
Opening balances
When setting up the system, the opening balance of each cash and bank account is entered. This is the starting point for all subsequent calculations.
Balances must be entered as of a specific date. The physical count is taken as the basis for cash, and the statement balance for banks.
Transactions prior to the opening date are not entered into the system. Trying to carry over the past delays the setup for months and rarely produces value.
Open current account balances must also be entered on the same date; otherwise, collection records will not match. transition from Excel We covered this step in the article.
Branch and scope connection
Each cash and bank account is linked to a company and, if necessary, a branch. This connection determines who will see which account.
Branch employees are generally not desired to see the headquarters bank account. The scope model provides this distinction; see the branch and warehouse scope article.
Account confusion in a multi-company structure is a serious risk. Recording one company's collection in another's account is a difficult error to correct; the multi-company model prevents this.
A distinction is also required on the authorization side. Viewing the account and issuing a payment receipt are different permissions; sensitive transaction authorizations we discussed in the article.
Common mistakes
Starting with a single cash register. Separating them later requires distributing past transactions, which is a difficult task.
Merging the POS account with the bank account. Value date differences become invisible and reconciliation fails.
Mixing personal accounts. When business and personal accounts are not separated, both tracking and accounting are disrupted.
Guessing the opening balance. A balance entered without a count or statement generates discrepancies from day one.
Definitions are made in the finance module; collection and payment receipts are linked to these definitions.
Daily cash register discipline
Even if the cash register definition is set up correctly, the balance will not reconcile without daily discipline. Cash is the asset most prone to remaining unrecorded.
The golden rule is: every money movement must be tied to a document. This includes advances taken from the cash register, minor expenses paid, and amounts deposited into the bank.
It is recommended to perform a physical count at the end of the day and compare it with the system balance. A small difference is easily found today; it cannot be found a week later.
In retail, this control is part of the shift closure; we discussed the flow in the cash movement and end-of-day closure article.
As for field teams, collections must be reported to the headquarters on the same day. The longer the cash remains with the representative, the higher the risk; you can check out the field mobile usage article.
POS and credit card accounts
Card-based collections follow a different flow than cash. Money does not transfer to the account instantly; value dates and commission deductions come into play.
Therefore, POS collections must be tracked as a separate account. A receivable is created at the time of sale; this receivable is closed when it transfers to the bank account.
Combining these two steps causes card collections to appear in the bank balance prematurely and leads to faulty cash planning.
In installment sales, the picture becomes even more complex; each installment transfers to the account on a different date. This maturity structure needs to be tracked.
Commission amounts must also be recorded as expenses; otherwise, the sales margin appears higher than it actually is. We covered this dimension of cash planning in the cash flow tracking article.
Frequently asked questions
Can the cash balance drop below zero?
Physically it is not possible; if it drops in the system, there is a recording order error or missing entry.
How is the transfer between the cash register and the bank recorded?
With a transfer entry; see the transfer article.
Can the cash register be managed from mobile?
Cash and bank definitions, as well as collection-payment receipts, can also be used on mobile.
Where are checks and promissory notes tracked?
They are tracked along with maturity tracking; you can check the term sales and collection risk article.
Cash and bank definitions are the foundation of the finance module. When set up correctly, balances match; when set up incorrectly, reconciliation issues occur every month.
The questions that need to be answered before setup are: how many physical cash register points do you have, which bank accounts belong to the business, will you use foreign currency accounts, and as of which date will you enter the opening balance?
Performing the setup without clarifying these four questions creates a structure that is difficult to correct later. The opening date decision is particularly important; choosing the beginning of a month or period makes reconciliation much easier.
We recommend performing daily cash checks throughout the first month after setup. Small discrepancies that arise during this period reveal definition errors early and are easy to correct.
by meeting with the EQLEM teamyou can set up your cash and bank structure.