For many small businesses, cash is the asset that is most likely to come up missing. Fortunately, proper cash handling practices are not difficult to implement. Understanding some of the more egregious examples of bad cash handling practices can help you assess how your employees are doing at protecting your most liquid asset.
Cash Register Access
Cash handling often goes when more than one employee has access to the cash register. If the register is over or short at the end of the shift, the manager does not have any one individual to hold accountable. A best practice is to only allow one employee access to the cash register and to count the employee into the cash drawer at the beginning of the shift and out at the end of the shift. Small-business managers should remember that keeping only one person per cash drawer helps identify employees with poor cash handling skills or sticky fingers and also protects those who are doing a good job from being accused of theft.
Focus on Shortages
In many companies, managers are much more concerned with cash shortages than overages. This practice is harmful for several reasons. First, a deviation from the expected amount of cash either means that you've short-changed the business or the customer. Cashiers should be focused on accuracy. Second, focusing on shortages could encourage cash-handling employees to cover accidental shortages with personal funds. This could reduce the employee's wage to below minimum wage, leaving your company open to penalties. In addition, covering shortages with personal funds could help employees justify taking from the register when overages happen. Finally, overages often happen when items are sold to customers and not rung through the company's register system. While cash might not be short in these situations, inventory counts almost certainly will be.
Insufficient Cashier Training
Like most other job skills, employees need practice to become good cash handlers, and cashier training is where this should begin. By not training employees properly, small-business managers are setting workers up to fail. Employees should be taught to protect cash vigilantly by making sure their eyes never leave an open drawer, they don't share cash drawers with others, they count change back to customers and they beware of quick-change artists. Properly training cash handlers can protect your business's cash and reduce stress on new employees, which in turn can reduce turnover.
Unsupervised Cash Counts
Many companies that go to the trouble of ensuring that only person operates a cash drawer at any given time lose control over the procedure by having employees count into or out of a drawer unsupervised. Unsupervised cash counts allow employees the opportunity to add or subtract funds from their till without management knowledge, concealing cash handling problems. By requiring two people to be present during a cash count, a manager can greatly increase the accuracy of cash handling.
- Intermediate Accounting: Donald E. Kieso, et al.