For a retailer, it’s important to have proper control over your cash flow. After all, whatever you sell generates cash for you. It provides a working capital for you to invest in your inventory further. Today, where a retailer runs his stores at multiple locations and don’t have to physically present at the retail store. Some internal controls must also be defined and put in place. Furthermore, one such important internal control is to balance a cash register (drawer) regularly.
The onus is on retailers to define clear store policies for the handling of cash.
The cash management system must be robust that the chances of errors, omissions, and theft are zero. Moreover, Adopting digital payments is a solution; however, it does not turn out to be feasible for smaller stores or places where customers prefer using cash. You don’t want to be there in an awkward situation where you would be assuming that all your transactions are going to be digital. However you have a couple of customers insisting on paying in cash. Further, the collection made through digital modes also requires reconciliation, and hence it is important to balance a cash register.
Maintaining and balancing the cash drawer is equally important just like watching the front door of your retail store. Now, if you still think why and how you should balance a POS cash register drawer. We have answered all your questions below.
Why should you balance a cash register drawer?
Putting first things first, balancing a cash register means you are being concerned about all the transactions taking place irrespective of the mode, be it cash, credit card, or digital.
The balancing of cash drawers ensures all your transactions are being accounted for, thereby giving you clarity about your cash flow.
One important thing is that no matter how much you trust your employees, there could be one nefarious employee who can get tempted to commit cash theft, and you don’t want to take that risk, do you?
Although it might seem like a good thought to have just one drawer for everyone, it is recommended to have a separate cash register drawer for different people handling it.
More the people with the responsibility of handling the cash drawer, more accountability can be placed on them. It is also a common practice to check and balance the cash drawer at the end of the day.
Another important practice that most people miss out on is starting the day by counting what is already there in the drawer from the previous day. It will ensure maximum stability, consistency and make the balancing process a lot easier while you will be rest assured that you have enough cash to satisfy daily demands.
Best practices for cash management
1. Determine cash-to-keep
As a sound retail store management policy, you should determine the cash-to-keep, and at the end-of-the-day. More the cashier has to ensure that he is leaving that much amount for the next day while balancing the cash register.
2. One person per till
A single person should manage only one cash register. Besides, there should not be any sharing of responsibilities as it does away with accountability.
3. Define till-open procedures and till-close procedures
As a part of till-open and till-close procedures, the cashier should physically count the cash and enter the same into the POS software. This works as an important internal control for cash management.
4. Deposit cash throughout the day
You might be giving a whole lot of attention to keep your store neat and tidy, from aisles to racks to storerooms; then, why avoid the cash register? Depending upon the size of your store, the volume of transactions, you must determine the frequency of cash deposit to the main cash or bank.
Generally, such deposits are made at a slower time of the day when the footfall is less. Then you must count the cash and remove the difference from the initial morning count. Whether you are the employee or the store manager, make sure you keep at least two witnesses at the time of physical cash count to avoid any clashes in the future.
5. Analyze your end-of-day balance
Your hard work will finally show some result after a long day of efficiently and honestly managing the register. Therefore, the first step you need to follow is to analyze the cash balance at the end of the day.
You also check whether cash was deposited throughout the day, and the balance lying in the till at the end of the day is within limits specified in the end-of-day procedures.
How to balance a cash register drawer?
Here is the step-by-step process to balance a cash register:
1. Beginning-of-day check
The cashier should check that the cash-to-keep amount tallies with the amount reported by the POS software. The cashier should also physically count the cash lying in the cash drawer, and if there’s a mismatch, the cashier should immediately report it to the store manager, but the POS software should not disclose the amount of difference.
2. Shift-change check
Every time the shift is changed, the outgoing and incoming cashier should count the cash, enter it into the POS system, and check if it tallies with the one reported by the POS software. If there’s a mismatch, he should immediately report it to the store manager, but the POS software should not disclose the amount of difference.
3. End-of-day check
At the end of the day, before closing the till the cashier should physically count the cash. He also should enter the same in the POS software. If there’s a mismatch, he should immediately notify the store manager. Furthermore, all instances of cash mismatch should be handled carefully. The store manager should do a thorough investigation before making any cash adjustments.
How to balance a cash register – FAQs
To balance a cash register is the process of reconciling it with all the POS transactions made in a day and ensuring that the total cash balance in the cash drawer tallies with the opening balance, inflow, and outflow of cash.
If currency denomination wise cash inflow and outflow are recorded in the POS system, it acts as a strong internal control and eases the cash drawer balancing.
One should recount the cash lying in the drawer and see if there was a mistake in counting. If there was no mistake, then the cashier should immediately inform the store manager. The store manager will then do the physical counting, investigate further, and record the mismatch.
The cash register should be balanced when the till is opened, and when there is a change in the shift of the cashier, and at the end of the day.