Bookkeeping For Dummies
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Most businesses empty cash registers each night and put any cash not being deposited in the bank that night into a safe. Some businesses today aren’t even using traditional cash registers. They use portable devices to take orders and then a cash drawer to manage cash receipts and disbursements. Even if your business is using something other than a traditional cash register, the basics of cash handling remain the same.

Have you ever gone into a business and tried to pay with a large bill only to find out the cashier can’t make change? It’s frustrating, but it happens in many businesses, especially when they don’t carefully monitor the money in their cash registers.

Many businesses instruct their cashiers to periodically deposit their cash in a company safe throughout the day and get a paper voucher to show the cash deposited. These daytime deposits minimize the cash held in the cash draw in case the store is the victim of a robbery.

All these types of controls are necessary parts of modern business operations, but they can have consequences that make customers angry. Most customers will just walk out the door and not come back if they can’t buy what they want using the bills they have on hand.

At the beginning of the day, cashiers usually start out with a set amount of cash in the register or cash drawer. As they collect money and give out change, the register records the transactions. At the end of the day, the cashier must count out the amount of change left in the register or cash drawer, run a copy of all transactions that passed through that register, and total the cash collected.

Then the cashier must prove that the amount of cash remaining in that register or cash drawer totals the amount of cash at the beginning of the day plus the amount of cash collected during the day.

After the cashier balances the register or cash drawer, the staff person in charge of cash deposits (usually the store manager or someone on the accounting or bookkeeping staff) takes all cash out except the amount that will be needed for the next day and deposits it in the bank.

In addition to having the proper amount of cash on hand necessary to give customers the change they need, you also must make sure that your cashiers are giving the right amount of change and actually recording all sales on their cash registers or other portable devices. Keeping an eye on cashier activities is good business practice, but it’s also a way to protect cash theft by your employees.

There are three ways cashiers can pocket some extra cash:

  • They don’t record the sale and instead pocket the cash. The best deterrent to this type of theft is supervision. You can decrease the likelihood of theft through unrecorded sales by printing up sales tickets that the cashier must use to enter a sale and open the cash drawer.

    If cash register transactions don’t match sales receipts, then the cashier must show a voided transaction for the missing ticket or explain why the cash drawer was opened without a ticket.

  • They don’t provide a sales receipt and instead pocket the cash. In this scenario the cashier neglects to give a sales receipt to one customer in line. The cashier gives the next customer the unused sales receipt but doesn’t actually record the second transaction in the cash register or other mobile device. Instead, he or she just pockets the cash.

    In the company’s books, the second sale never took place. The customer whose sale wasn’t recorded has a valid receipt though it may not match exactly what he bought, so he likely won’t notice any problem unless he wants to return something later.

    Your best defense against this type of deception is to post a sign reminding all customers that they should get a receipt for all purchases and that the receipt is required to get a refund or exchange. Providing numbered sales receipts that include a duplicate copy can also help prevent this problem; cashiers need to produce the duplicates at the end of the day when proving the amount of cash flow that passed through their registers.

    In addition to protection from theft by cashiers, the printed sales receipt system can be used to carefully monitor and prevent shoplifters from getting money for merchandise they never bought.

    For example, suppose a shoplifter took a blouse out of a store, as well as some blank sales receipts. The next day the shoplifter comes back with the blouse and one of the stolen sales receipts filled out as though the blouse had actually been purchased the day before.

    You can spot the fraud because that sales receipt is part of a numbered batch of sales receipts that you’ve already identified as missing or stolen. You can quickly identify that the customer never paid for the merchandise and call the police.

  • They record a false credit voucher and keep the cash for themselves. In this case the cashier wrote up a credit voucher for a nonexistent customer and then pocketed the cash themselves. Most stores control this problem by using a numbered credit voucher system, so each credit can be carefully monitored with some detail that proves it’s based on a previous customer purchase, such as a sales receipt.

    Also, stores usually require that a manager reviews the reason for the credit voucher, whether a return or exchange, and approves the transaction before cash or credit is given. When the bookkeeper records the sales return in the books, the number for the credit voucher is recorded with the transaction so that she can easily find the detail about that credit voucher if a question is raised later about the transaction.

Even if cashiers don’t deliberately pocket cash, they can do so inadvertently by giving the wrong change. If you run a retail outlet, training and supervising your cashiers is a critical task that you must either handle yourself or hand over to a trusted employee.

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Lita Epstein, MBA, designs and teaches online courses in investing, finance, and taxes. She is the author of Trading For Dummies and Bookkeeping Workbook For Dummies.

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