Every business handles its transactions through a cash register. No matter what payment type they prefer or accept, a business must have a register ready to deal in cold, hard cash. But keeping track of this money day in and day out requires a detailed system. Here are the essential tips for balancing your cash register.
Cash Register Basics
Cash registers have been around for ages as the customary way to store and transfer money in places of business. These mini banks equip businesses with the means to accept customer payments, so every business owner and employee must understand how to operate one.
What Are Cash Registers and How Are They Used?
Whether you are new to a business or have not spent much time on the other side of a service counter, you may not know what cash registers are exactly. Yet, these tools are the vehicle by which businesses transact business with customers.
However, as customers increasingly utilize touch-free and digital payment options, the cash register is not the primary method of payment exchange. Yet, physical bills and coins continue to serve as the backbone of financial sales. So, you must always be ready for a customer to pay with cash and have the money to return the difference.
Why Must You Balance a Cash Register?
During a business day, cash registers open and close with varying amounts of cash and coins filtering through. At the beginning of the day, an employee starts with a set of cash in the register tray. Most businesses keep this tray in a safe, along with other financial reserves and important documents. So, at the start of their shift, a team member or manager will retrieve the tray and start up the cash register.
As customers come through and pay for items in the shop, the register will calculate how much cash came into the register and how much remains. At the end of the day, the employee is responsible for returning the drawer and printing out all transactions with the total at the bottom. You should not have any discrepancies between the anticipated total and the cash in the drawer. If you do, it may signal that an employee isn’t handling the system correctly or that illicit activity is occurring. While you may trust your employees fully, it never hurts to monitor this process so nothing mysterious happens.
Balancing a Cash Register
Balancing your cash register is a vital part of business efficiency, organization, and ethics. You must teach both yourself and your employees the proper methodology. Otherwise, you could lose money or skew your financials.
Set Expectations From the Start
When training your staff on how to use a cash register, you must first set expectations. You should emphasize the need for attention to detail and accurate accounting. The person who takes the drawer and counts it must handle the cash with care and know the expected starting amount to adjust accordingly.
You must also tell employees not to move cash between registers unless okayed by a manager. Each staff member should have their own drawer that they use throughout their shift. You don’t need a drawer for every person on staff—just enough for everyone who is working the shift. The fewer people who handle the cash, the better. This way, if any issues occur, the accountability lies with fewer team members.
Begin With Counting
Employees and managers typically count cash drawers at the end of the day. However, it is vital to count cash at the start of the day, too. Unless you work at a twenty-four-hour establishment, there are significant stretches of time where no one is in the building.
From the time your last employee counts that cash at the end of the day to the beginning of the next, anything could happen with your money. Counting the drawers at the start of the day avoids confusion later down the road and increases accountability for all employees.
Deposit and Count Throughout the Day
Depending on how busy your business is on a given day, you could go through your cash quickly. That’s why you must deposit cash throughout the day and count your new totals. The last thing you want is a customer who needs cashback or the cash difference, and you lack the bills to use. If you have downtime, take a trip to the back to replenish your drawer so you can better serve customers who check out with you.
Count at End-of-Day
The end-of-day procedure at your business must include the final cash count. Withdraw the cash tray and print the X read that reports the cash in the drawer. Take both these items to a secure location at the back of the store and count the cash by hand. The best way to make sure you have an accurate count is to use a sticky note and record the number of each bill and coin denomination.
For example, you may count record something like twenty-four singles, four twenties, and eight quarters. After writing each amount, you can multiply across and add the sum. This total should match the number at the bottom of the X read. If not, you should recount and double-check your math—it is easy to miscalculate at the end of a long day.
Separate and Store Earnings
After recording your total in the drawer, it is time to separate earnings from the starting amount. While you may not have an employee to handle the final cash transfer, it is critical to remember this last step. Take the total earnings from each drawer and balance them for the next day. Then, gather up your earnings and store them in a safe along with the full cash drawers. If you work with a bank, you should take this cash straight to your financial institution at the end of the day or week, so all your accounts are accurate.
Knowing these essential tips for balancing your cash register will help your business run smoothly. Always be sure to iron out discrepancies on the spot. Otherwise, you could develop problems with your accounting down the road. If you need a system to manage your transactions and support your cash balancing efforts, try out our retail accounting software from Business Software Solutions today.