How to make a cash-heavy business bank-friendly

The aim is not to look good to the bank, but to make the flow of money so orderly and verifiable that the bank, your accountant and Skatteetaten can all see easily where the turnover comes from. The foundation is the daily settlement.

Card, Vipps and cash can all count as cash sales

In the bookkeeping rules, a cash sale means more than notes and coins. Where the customer pays on delivery, payment by card also counts as a cash sale – and Skatteetaten takes the view that other immediate means of payment, such as Vipps, can be covered too. That means the requirements for a cash register system and a daily settlement apply to far more businesses than those actually handling notes. The rules themselves – the requirement for a declared cash register system, the exemptions, and what the documentation has to contain – are set out in Cash sales – cash registers, daily settlement and documentation. This article is about what the bank looks for.

The daily settlement is the foundation

A correct daily settlement (dagsoppgjør) is what makes cash turnover verifiable. Without it, neither the bank nor your accountant nor Skatteetaten can see where the money came from. The point for the bank is that the business can later explain a specific difference: why the till system shows NOK 18,500 in cash turnover while the balance at the end of the day is NOK 15,500, because NOK 3,000 was taken out and documented earlier in the day. The specific requirements – the Z-report, the terminal report, the count, the dating and the documentation of withdrawals – are in Cash sales – cash registers, daily settlement and documentation.

Bank deposits have to be explainable

There is no general requirement to bank all the cash the same day. But over time the chain should be easy to follow: registered sales, daily settlement, documented cash movements, cash on hand, bank deposit. If the business deposits NOK 80,000 in cash, it should be possible to explain how that amount built up from documented daily settlements. This is also useful when the bank is considering whether the transactions match what it knows about the business's normal activity.

Large cash purchases can cost you the deduction

It is not unlawful to pay a bill in cash simply because it is large. But where payment for goods or a service totals NOK 10,000 or more, it must as a general rule go through a bank or another payment intermediary if the business is to keep the tax deduction and the deduction for input VAT. Splitting one delivery into several smaller cash payments does not help either. Payments relating to the same goods, service or contract are assessed together.

Tips have to be kept under control

Tips that go to employees are treated as employment income. The employer has to report tips in the a-melding, make the advance tax deduction and calculate employer's national insurance contributions. That applies even where the employee receives the tip directly from the customer. For the bank, the point is that tips must not make the cash flow inexplicable. If tips are mixed into the till without being registered, the differences become hard to explain. The bookkeeping rules have their own provisions on handling cash tips – see Cash sales – cash registers, daily settlement and documentation.

Owner contributions and other cash need the right explanation

Another source of questions is cash paid in that does not come from the day's sales. Where the owner puts money in, it has to be clear what the money actually represents. In a limited company that might be a loan from the shareholder, a capital contribution, or the settlement of an existing balance. The documentation has to match the real transaction. The same applies to withdrawals. A cash withdrawal must not be hidden as a till difference. In a limited company the owner cannot simply take money out privately and post it to a private account the way you can in a sole proprietorship. The withdrawal has to have a real and lawful basis and be booked accordingly.

What will the bank typically try to understand?

When a bank follows up a cash-heavy business, it will normally try to understand the business model and whether the transactions fit it. Finanstilsynet mentions the business model, who the customer trades with, the source of funds and the expected transaction pattern as relevant information. A well-run cash business should be able to document sales through the till system and the daily Z-reports, the daily count and any till differences, card and app payments against the terminal data, documented cash withdrawals, the link between cash on hand and later bank deposits, tips handled correctly, and unusual deposits or owner transactions with the underlying documentation. The business does not automatically have to send the whole set of accounts to the bank. What matters is being able to answer precisely when the bank asks.

This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.

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