Records, Cash Handling and Banking

Why records matter

A drug revolving fund handles two things that can easily disappear: medicines and money. Records answer three questions at any time:

1. What stock do we have, and what was used?
2. How much money did we receive, spend and bank?
3. Does everything agree, and if not, why not?

Without records, nobody can tell whether the fund is surviving. When money or stock goes missing, records are the only way to find out where, and the best protection for the honest worker.

The main records

The stock card and cash book are the two most important. The stock card controls the medicines, and the cash book controls the money.

Receiving cash

1. Issue a receipt for every sale. Number the receipts in order, and never tear one out or skip a number.
2. Write the date, the item, the amount and sign.
3. The copy stays in the book, so the total of the copies must match the cash collected.
4. Count the cash at the end of each day with a second person watching.
5. Record the total in the cash book.
6. Bank the money regularly. Do not leave large amounts of cash lying around.

If a medicine is sold, it must also be taken off the stock card, so the stock card and the receipt book tell the same story.

Rules for cash

• Never mix the fund's money with personal money, or with money for other purposes.
• Never borrow from the cash box, even if you intend to repay it.
• Never spend takings without a record. All payments go through the cash book.
• Keep the cash box locked, and limit the number of people with keys.
• Count the cash in front of a second person, and both sign.

Petty cash and the imprest system

Some small costs, such as stationery, transport or cleaning materials, are better paid in cash than by cheque. A small amount is kept for this purpose, called petty cash.

The imprest system keeps it under control:

1. A fixed amount (the imprest) is given to the person in charge, for example ₦10 000.
2. Each payment is written on a voucher, with a receipt attached if one exists.
3. At any time, cash in the box + vouchers = the imprest.
4. When the cash runs low, the vouchers are checked and the box is topped up by the amount spent, so it returns to the fixed amount.

Worked example

The imprest is ₦10 000. During the month the vouchers are: stationery ₦2 500, transport ₦3 000, cleaning materials ₦2 000.

• Total spent = 2 500 + 3 000 + 2 000 = ₦7 500
• Cash that should be in the box = 10 000 − 7 500 = ₦2 500
• Top-up needed = ₦7 500, after which the box holds ₦10 000 again.

If the cash and the vouchers do not add up to ₦10 000, something is wrong. Report it at once.

The cash book

The cash book records every naira in and out. It has two sides:

At the end of the period, balance = total receipts − total payments.

Worked example

A fund opens the month with ₦50 000. It receives ₦90 000 from sales and ₦10 000 from a grant. It pays ₦100 000 for medicines and ₦15 000 for other costs.

1. Total receipts = 50 000 + 90 000 + 10 000 = ₦150 000
2. Total payments = 100 000 + 15 000 = ₦115 000
3. Closing balance = 150 000 − 115 000 = ₦35 000

Checking the cash book against the bank statement

Each month, compare the cash book balance with the bank statement. The two may differ for ordinary reasons:

• a cheque has been written but not yet cashed;
• a deposit has been made but not yet cleared;
• the bank has taken charges that are not yet in the cash book.

Worked example

The cash book balance is ₦120 000. The bank statement says ₦100 000. A cheque for ₦20 000 has been issued but has not yet been cashed.

• Cash book balance − unpresented cheque = 120 000 − 20 000 = ₦100 000

This agrees with the bank statement, so the difference is explained. If a difference cannot be explained, it must be investigated and reported.

Opening and operating a bank account

A separate bank account protects the fund and makes cash easier to trace. The usual steps are:

1. Choose a bank that is reachable and has reasonable charges.
2. Agree who the signatories will be, usually at least two people from the committee and the health unit.
3. Collect the documents the bank asks for. Requirements differ by bank, and often include the committee's resolution or letter, identification for each signatory and an application form. Ask the bank for its current list.
4. Fill in the forms and give specimen signatures.
5. Make the first deposit, which can be the seed capital.
6. Keep the paying-in book and the cheque book safe, and record every deposit and cheque in the cash book.

Rules for operating the account:

• Two signatures are needed for every cheque or withdrawal.
• Never sign a blank cheque.
• Cheques are issued only for recorded, approved payments.
• The statement is checked each month.

How funds lose cash and stock

The most important idea is separation of duties. When different people receive, record, bank and check the money, one person cannot hide a loss.

Regular reports

Each month, prepare a short report for the committee showing: opening balance, receipts, payments, closing balance, the value of stock, and any problems. Sharing it keeps the community informed, and this is what gives a fund its accountability.