SOPs are critical to have in place as your business is forming and growing. These written procedures allow for easy transition of knowledge from employee to employee, can show process in/efficiency, and allows for a narrative of your internal controls.
Note: Identifying where in the process you should have a control is critical to know and enforce.
We use various tools to develop the SOPs such as a written documented procedure, Visio diagram, Excel workbook with instructions, etc. However, you maintain your SOPs make certain they are easy to follow and kept up to date.
Some accounting processes where you want to have well documented SOPs:
- Cash
- Accounts Receivable
- Purchasing
- Accounts Payable
- Payroll
- Inventory
- Fixed assets management
- Bookkeeping and maintaining the books and records
Since cannabis is cash intensive, lets drill down further on cash. If you collect actual cash from customers, you should at minimum have written down the cash handling from the point of sale, to where the cash is kept, who has access to it, and how is disbursed.
The use of an electronic cash log should be part of the written SOP. The cash log columns to fill in are:
Internal controls are well rooted in the use of a safe to store the cash, limiting access, use of a cash log, and overall identifying who has access to this. The final control function is your accountant who should reconcile this account and flag shortages.
Maintaining written SOPs for your accounting processes should be part of management’s responsibilities. It does take time and effort, but it will save you much stress down the road when your business is growing and will ease new employee training.