The Digital Cash Book - Record Cash Transactions Digitally

Cash receipts in companies can be documented efficiently and cost-effectively with a digital cash book. Read here how to keep it correctly, why a cash book is not mandatory for small businesses and what else is important.

Digital Cash Book as an Alternative

If cash transactions are carried out in a company, these must be properly recorded like all other cash receipts. All receipts and expenditures paid in cash must be listed therein.

At the end, a cash report can be generated that shows you how much you have earned. The cash book, which includes all business transactions, is also used for the tax return.

In the past, cash books were kept manually, i.e. receipts and expenses were noted down by hand on paper. Today, however, most companies choose an electronic cash book, because it simplifies cash accounting considerably.

Is there an Obligation to Keep Cash Accounts?

Every entrepreneur who has cash receipts is obliged to keep a cash book. However, this only applies to companies that are required to keep a balance sheet. Freelancers and self-employed persons who determine their profits by means of the income statement (EÜR) are not obliged to keep a cash book.

Furthermore, there are exemptions for start-ups and sole traders who do not exceed certain turnover limits. In addition, the cash book does not need to be of interest to small entrepreneurs, as keeping it is not necessary here either. In small businesses, turnover is limited, so there is no obligation to keep a cash book.

Digital Cash Book - Advantages and Disadvantages

A digital cash book offers advantages, but also disadvantages. For a better overview, we have taken a closer look at both sides for you below.

Digital Cash Book - Advantages

A digital cash book saves a lot of time and nerves, because you no longer have to leave handwritten entries. The entry is quick and usually easy. At the same time, you always have a good overview of your income and expenses. With a simple cash report, you can see every day what turnover your business has made.

Electronic cash books are less prone to errors due to the automated processes. In the event of incorrect entries, you receive the appropriate feedback. Since the cash book software is GoBD-compliant, you can calmly face an audit by the tax office and do not have to fear high additional payments due to discrepancies.

Another advantage are the frequently available interfaces to tax advisors or tax offices, but also to accounting and inventory management systems, which make your business processes even more efficient.

Digital Cashbook - Disadvantages

Although the advantages outweigh the disadvantages, some are still worthy to note. Not all software is easy to use, and in some cases a certain training period is necessary. If the software crashes before a backup has been made, data loss can cause problems. Furthermore, regular updates are necessary and the higher purchase and maintenance costs should not be forgotten.

Advantages

• Provides a good overview of daily income and expenditure
• Saves time due to fast data entry
• Less error-prone
• Many automated processes
• GoBD-compliant
• Facilitates company audits
• Often interfaces for tax consultants and tax office available

Disadvantages

• Software can crash
• Risk of data loss
• Regular updates necessary
• Higher acquisition and maintenance costs

Keeping a Cash Book - Requirements

If you want to keep an electronic cash book, certain requirements and regulations must be met.

This must be included:

• Date
• Amount of cash received or paid out
• Consecutive voucher number for each transaction
• Entry text with explanation
• Exact amount in euros indication of the tax rate (19, 7 or 0 % VAT)
• Exact amount of turnover tax
• Actual cash balance and debit cash balance

The target cash balance must always correspond to the actual cash balance. All entries in the cash report must be documented clearly, correctly and promptly. The overview should also be designed in such a way that a simple cash inspection is possible at any time and unannounced.

Once cash books have been created, it must not be possible to change them afterwards. You can therefore only use a cash book software for cash management in which no more changes are possible after all entries have been completed.

For cash book management, you can install cash book software locally on your computer or keep the cash book online. If you want to use your digital cash book for free, however, only a few online providers offer you simple tools with which you can easily document your cash transactions. If you want the cash book software to have additional functions for bookkeeping, invoicing and filing tax returns, professional software for a fee is usually the better solution.

This Is What a Good Cash Book Software Should Do

There are many providers of cash book software solutions. However, not all of them are suitable for professional use.

The Following Points Are Important in the Selection Process:

Comprehensible Software in German Language

The cash book must be easy to understand and comprehensible to auditors at all times.

Unalterable

The digital cash book must be unchangeable, i.e. entries must not be able to be subsequently changed, deleted or added after the close of the cash register.

Up-To-Dateness

The decisive factor is timeliness. After one day at the latest, all entries should be in the cash book.

Chronological Order

The correct timing of bookings is equally important.

Legal Security

Only if software meets the requirements of the GoBD will it be recognised by the tax office during a tax audit. If the auditor finds irregularities, time-consuming audits and high additional payments are possible in the case of false statements. Periods in which the cash turnover is not properly documented in the cash book are often subsequently estimated by the tax office and subject to high additional payments.

Simple Handling

The software should be intuitive to operate and also suitable for users with little technical experience.

Automatic Error Sourcing

Good electronic cash book software automatically detects errors and gives the user appropriate feedback. Interfaces to the accounting department, the merchandise management system, the tax office or the tax advisor are included in many professional tools.

Paper Receipt Function

Paper receipts should be easy to digitise and add to the software.

App

Some tools even offer an additional cash book app so that entries can be made on the go. This makes sense for mobile entrepreneurs, for example.

Regular Backups

The software should regularly and automatically back up all data.

Is a Digital Cash Register Also Sufficient?

Modern cash registers enable the simple and efficient recording of all cash transactions. This is why they are used in shops and pubs where many cash transactions are made every day. The digital cash register digitally stores all income and expenditure, prints customer receipts and supplies data to merchandise management systems or accounting software.

In addition, all cash transactions can be transferred to the digital cash book at the end of the day and easily evaluated. The obligation to keep a cash book is therefore not waived by the use of a digital cash register.

Providers of Cashbook Software Programmes

Are you planning to convert your cash book to a digital version? Here you will find a few professional software providers for digital cash books that have already proven themselves in practice.

• Lexoffice
• Lexware
• sevdesk
• DATEV