The world’s legal cannabis market size is estimated to reach $73.6 billion by 2027. In the U.S. at least, a large portion of this will come in the form of cold, hard cash as a result of ongoing regulatory, banking, and legal challenges.
With inadequate access to banking services, cannabis businesses are forced to run entirely on cash – a situation that makes them not only vulnerable to external and internal theft but also significant accounting errors.
To overcome these exposures and losses, cannabis businesses must take a proactive and diligent approach to cash management. A fully-integrated cannabis ERP solution can be beneficial to cannabis businesses for managing their cash inflow and outflow.
If you’re like most cannabis companies and having trouble organizing your dough too, take a look at the following tips you can use for effective cash management and how cannabis ERP can help:
Know Your Taxes
Learn all percentages and calculations required and allocate the appropriate amount for tax withholding purposes. Taxes can vary depending on your location and business type, so make sure you know the tax liabilities that apply to you.
To make your cannabis tax accounting even more precise, set projected revenues for each month/quarter/year, then calculate your expected tax bills for each period and set your savings goal accordingly.
Record Every Cash Transaction
A sales record for every cash transaction serves as proof that a sale occurred in the event you need to prove it in the future.
While it may be a bit time-consuming, don’t overlook the importance of keeping your books accurate and up to date. Without proper accounting practices, vital transactional data often gets lost or becomes full of errors.
From vendor payments to bank deposits to cash sales, by setting good habits and creating paper trails for each cash transaction, it helps you maintain up to date and error-free accounting records for future use.
With cannabis cloud accounting software, organizing your finances is simplified by department or even across multiple locations. You can access real-time financial reporting tools from anywhere for purchase orders, invoices, and cash management by recording detailed transactional data in the cloud.
Knowing your inventory cycle is essential. Every cannabis operator, from cultivator to manufacturer to retailer, has a varying inventory cycle resulting in different periods of cash flow.
A sound inventory management system helps you forecast product demand so that you can prevent shortages and overstock while maintaining enough supply. Demand forecasting further helps you better manage your cash and staff.
A cannabis-specific ERP inventory management system provides a proper reporting mechanism of inventory in your store, in the warehouse, or on its way.
Advanced features like cross-docking, double-entry inventory with no stock input helps improve and streamline internal operations.
By tracking cash payments and the subsequent financial flow into your accounts, proper inventory management helps avoid a costly mistake while keeping you prepared to make quick decisions.
Establish a Culture of Compliance
Make compliance a priority to prevent internal theft problems. When cash floats around untracked and without a culture of accountability, internal theft is more likely.
Define day-to-day procedures for cash handling and designate trusted employees to handle the movement of cash between the point of sale and secured locations.
In the end, establishing a culture of honesty falls short of standards that make it clear that your premises and all transactions are monitored and secure.
Cannabis ERP systems deliver security and accountability through detailed reporting, which tracks timestamps and other the real-time data required for compliance initiatives.
It is essential for every cannabusiness to ensure proper cash management for avoiding potential risks and ensuring revenue goals are met. A flexible and scalable cannabis ERP can help you address many industry challenges while improving your business operations.
Cannabis enterprise resource planning (ERP) software delivers a single source of accurate and up-to-date business data to cannabis companies. By integrating a purpose-built system that supports your specific cannabis industry needs, you get real business data and intelligence tools to reveal cash flow and noncompliance issues as well as manage complex cannabis accounting processes within the cannabis supply chain.
c2b teknologies offers a financial management package that delivers automation and accounting controls to keep your cannabis operation audit-ready and positioned to scale. Contact us to learn how we can bring improved business performance to your cannabis organization.