Bank & Cash Management
(Or: "How to keep your money where it belongs—in your account.")
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3.2.1 Bank Reconciliations (Monthly)
The Financial Polygraph Test
"If your books and bank statements don’t match, someone’s either stealing or you’re bad at math—both are bad."
💡 Battle-Tested Rules:
• The 5-Day Rule: Reconcile within 5 days of month-end (before memory fades)
• Common Culprits:
o Uncleared cheques
o Bank charges you forgot to record
o That ₹147 UPI payment you made drunk at 2 AM
• Horror Story: A Jaipur trader didn’t reconcile for 11 months. Discovered his accountant had siphoned ₹22L via "tiny" 1% discrepancies.
Self-Assessment:
✅ All transactions matched to penny?
✅ Outstanding cheques tracked?
✅ Bank fees recorded properly?
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3.2.2 Petty Cash Management
(The Black Hole of Small Expenses)
The Petty Cash Commandments:
1. Fixed Amount: ₹5,000–20,000 (seal the box with tape!)
2. Two-Person Rule: One requests, one approves, both sign
3. Receipt or Death: No scrap of paper = No reimbursement
🔥 Bloodbath Case:
A Kochi startup’s "petty cash" grew to ₹85,000/month. Turned out the office boy was running a chai stall with company funds.
Pro Hack:
Use prepaid expense cards (like RazorpayX) instead of cash—auto-tracked, limited amounts.
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3.2.3 Handling Bounced Cheques
(When "Trust Me" Isn’t Enough)
Legal Grenade Checklist:
Day Action Legal Power
Day 1 Call issuer + redeposit Friendly reminder
Day 3 Send legal notice (Section 138) Starts criminal case timeline
Day 15 File police complaint Non-bailable warrant possible
💀 Nightmare Scenario:
A Mumbai supplier bounced 17 cheques totaling ₹42L. By the time the founder reacted, the supplier had sold his factory and vanished.
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🛡️ Cash Management Health Check
"How jail-proof are you?"
Component 😱 Orange Jumpsuit 🛠️ Survivable 🛡️ Fort Knox
Reconciliations Last done in 2019 Monthly but takes 2 weeks Automated + reviewed
Petty Cash Free-for-all cookie jar Logbook but no receipts Digital approvals + caps
Bounced Cheques "They’ll pay eventually" Angry calls only Legal notice within 72hrs
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🚨 Crisis Protocols
"When money goes rogue:"
Disaster Emergency Fix Prevention
Bank balance ≠ books Isolate discrepancy + audit trail Reconcile weekly, not monthly
Petty cash vanished Freeze system + physical audit CCTV above cash box
Big cheque bounced Issue legal notice SAME DAY Take PDCs as security cheques
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📌 Pro Tips for Founders
1. The 3-Binder System:
o Binder A: Original signed cheques
o Binder B: Bounced cheque notices
o Binder C: Bank reconciliation reports
(Yes, physical copies—tech fails)
2. Cheque Security:
o Never sign blank cheques
o Use "A/C Payee Only" crossing
o Store chequebooks like diamonds
3. Digital Firewall:
o Separate bank login for viewing vs transacting
o SMS alerts for every transaction
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🎯 Final Thought
"Cash is oxygen. Bank management is the mask. Forget it, and your business suffocates slowly."
