What are cash receipts?

Cash receipts are all cash and check payments received by a business, including customer payments, owner contributions, and other inflows. For professional service firms, cash receipts must be documented, deposited promptly, and recorded accurately to maintain financial control.

Key characteristics

• All cash and checks received

• Includes customer payments

• Must be documented

• Should be deposited promptly

• Recorded in the accounting system

• Subject to internal controls

Why it matters for professional service firms

Cash receipts represent revenue collected and must be safeguarded. Poor cash receipt handling leads to lost payments, delayed deposits, and fraud risk. Professional service firms should implement controls to ensure that all receipts are documented, deposited promptly, and recorded accurately.

Real-world example

Tom's firm received 3 checks totaling $24,600. Cash receipts process: checks logged when received with date, amount, and client, restrictively endorsed immediately, deposited within 1 business day, and recorded in the accounting system with proper client application. Bank reconciliation confirmed the deposit matched the logged receipts. No checks lost or delayed since implementing the formal process.