Cash Management in 2020: What Business Owners Need to Know

Business owners are required to record all cash flows in their day-to-day operations and retain the supporting documents for the long term. It is particularly important, especially with regard to tax returns and tax audits, that business owners have all relevant figures and transactions on hand. In addition to general commercial and tax law requirements for record-keeping and retention, proper cash management is crucial. Business owners who use electronic cash register systems must adhere to various rules. In this article, we aim to provide an overview of cash management in 2020 and highlight what might be relevant for your business. As tax advisors in Düsseldorf, we know that frequent changes in the law often lead to unintended errors. Our consulting services help you avoid such misunderstandings.

Cash Management – What Are Electronic Recording Systems?

The term “electronic recording system” is frequently used in the context of cash management. To facilitate understanding, we would like to explain this concept in more detail at the outset: Electronic recording systems consist of hardware and software for electronic data processing that help record and document business transactions. Cash management and the use of electronic recording systems are particularly common in businesses where a large portion of payment transactions is conducted in cash (e.g., a bakery). In practice, the following systems are classified as electronic recording systems:

• electronic cash registers
• PC-based POS systems
• Tablet/app-based POS systems
• Scales with cash register functionality

What are the tax law principles and key administrative regulations?

A wide range of tax laws and administrative regulations apply to cash register management. To provide a clear overview, the most important laws are listed below. As a business owner, you do not need to read all the legal texts or even memorize them. Rather, you should have a good understanding of the most important regulations. The legal framework is governed by the following laws:

• Section 145 AO = General requirements for bookkeeping and records.
• Section 146 AO = Regulations for bookkeeping and record-keeping.
• 146a AO = Regulations for bookkeeping and record-keeping using electronic record-keeping systems.
• 147 AO = Regulations for the retention of documents.
• Cash Register Security Ordinance (KassenSichV) = Ordinance specifying the technical requirements for electronic recording and security systems.

Building on these fundamental laws, the precise interpretation is explained in so-called BMF letters. The following regulations are important:

• Cash Register Directive 2010: BMF, Letter dated Nov. 26, 2010 – IV A 4 – S 0316/08/10004-07, BStBl 2010 I p. 1342 KAAAD-56752.
• Implementation Decree on Section 146 AO: BMF, Letter dated June 19, 2018 – IV A 4 – S0316/13/10005 :53, BStBl 2018 I p. 706 KAAAG-87345.
• Application decree regarding § 146a AO: BMF, letter dated June 17, 2019 – IV A 4 – S 0316 a/18/10001, BStBl 2019 I p. 518 GAAAH21300.
• Non-objection rule until September 30, 2020: BMF, Letter dated Nov. 6, 2019 – IV A 4 – S 0319/19/10002 :001, BStBl 2019 I p. 1010 LAAAH-34462.
• Revised version of the GoBD: BMF, letter dated Nov. 28, 2019 – IV A 4 – S 0316/19/10003:001 TAAAH-23416.

For business owners who rarely, if ever, deal with cash management, the many regulations and laws can quickly become confusing. It therefore makes perfect sense to seek advice from a qualified expert. We are happy to advise you on tax law questions and concerns. Below, we will briefly address some important aspects of cash management. But don’t forget: This article cannot replace a comprehensive consultation!

Core Function of Electronic Cash Management

Just a few years ago, most business transactions were recorded on paper, printed out, and then stored. Nowadays, electronic cash management is the standard. The major advantage of electronic cash register systems is that individual data can be accessed at any time with just a few clicks. Especially during a tax audit, it is crucial that electronic data is available quickly and in an organized manner. In practice, printed statements or similar documents are rarely accepted anymore. Nowadays, electronic receipts are largely what tax advisors look for as accounting records. However, even here, purely digital data is increasingly being relied upon.

Individual Recording Requirement – What Needs to Be Considered?

When recording business transactions, there have been and continue to be recurring issues with manipulation. Since 2018, the individual recording requirement has served as a solution within the framework of electronic cash management: According to this regulation, electronic recording systems must record individual business transactions immediately and in an unalterable manner upon completion. There are no exceptions to this rule! Furthermore, it is essential that every business transaction be fully verifiable. In addition, it must be possible to retrieve the recorded data as individual items. More specifically: items or business transactions must be precisely defined and programmed into the electronic cash register.

What is procedural documentation?

Cash register systems are complex. With a large number of business transactions, audits—for example, by the tax authorities—can be complicated. To facilitate the verification of data, detailed procedural documentation is necessary. The following operational areas should be explained as part of the procedural documentation:

• General operational description
• User documentation
• Operational documentation
• Technical system documentation

Procedural documentation is often overlooked or not carried out properly. We would therefore like to take this opportunity to remind you to always take care to avoid errors in this area.

Certified Technical Security Device (zTSE)

Since 2020, all point-of-sale systems must have a certified technical security device (zTSE). For business owners with older systems, there is a transition period until September 30, 2020. If you, as a business owner, have not yet switched to the new standard, you should expedite the necessary implementation.

Tax law questions answered by experts

Tax law and the associated regulations are complex and difficult to navigate without the right expertise. Fortunately, business owners don’t have to navigate the bureaucratic jungle alone. As tax advisors in Düsseldorf and Oberhausen, we help clarify tax issues and ensure compliance with guidelines. We are also happy to assist you with cash management. Our team looks forward to a consultation with you. Contact us to schedule a consultation.