Balancing your cash drawer is an essential part of your business’s daily routine. Just like brushing your teeth, you should also be balancing your cash register drawer daily.
If you’re struggling to balance your cash drawer, you’re not alone. Read on to learn how to balance your cash drawer as well as tips and tricks to keep your drawer in shipshape.
What is a cash drawer?
Before you delve into how to balance a cash drawer, you need to learn a little background information about it.
Your cash drawer, also called a register or till, stores cash, coins, checks, and other valuable items (e.g., coupons) at the point-of-sale (POS).
At the end of each day, shift, or period, you must balance your cash drawer to account for all incoming transactions. Transactions not only include cash and checks, but also credit card payments and tips (if applicable).
It’s best if you assign designated employees or managers to balance the cash drawer. That way, you have trusted employees working with your incoming cash versus multiple individuals.
Businesses that are typically responsible for balancing a cash drawer include:
- Clothing stores
- Supermarkets
- Restaurants
- Bakeries
- Other retail stores
How often should you balance a cash drawer?
To keep your books as accurate as possible, you should balance your till every day or after every shift. That way, you can quickly (and easily) make corrections if something doesn’t add up.
Correcting something from a few days, a week, or even weeks ago can be time-consuming and complex because you need to go back and check each day individually for errors. Balancing on a daily basis helps reduce the pain of tracking down cash drawer discrepancies.
Steps for balancing the cash drawer
When it comes to balancing your cash drawer, your steps might differ from another business’s. For example, a bigger business might need to make multiple deposits during the day. Or, a smaller business might only have one cash drawer to count.
Regardless of how small or large your business is, here are four steps to get you on the right foot when it comes to balancing your cash drawer.
1. Get the POS report
Before you begin balancing your cash drawer and accounting for any incoming cash flow, you need to print or access a POS report that details how much you should have in your till.
A POS report will break down totals by category, like cash, checks, and credit card transactions.
2. Count the cash
Once you have your POS report handy, it’s time to count your cash.
You should keep a consistent amount of money in your register at the start of each day or shift, such as $100. This ensures you have enough cash to give change to your customers.
When you count your till at the end of each shift or day, count your cash and total up your checks, credit card receipts, and other transactions.
To make the process less tedious, consider investing in a counting machine. With a counting machine, you don’t have to worry about manually counting cash or change by hand.
Be sure to also deduct your starting cash balance from your current cash balance (e.g., subtract $100).
Record how much the till has in cash, checks, coupons, credit, etc. Here’s an example of how you might keep track of your totals:
| Receipts | Sales | Total |
|---|---|---|
| Beginning Cash | $100 | |
| Cash Sales | $500 | |
| Credit Card Sales | $600 | |
| Total Sales | $1,100 | |
| Sales on Credit | $0 | |
| Cash Received | $500 | |
| Total Cash in Register | $600 |
After you total up your credit card receipts, checks, and cash, compare the totals to your POS report. Do they match? If so, you’re good to go! If not, you have some digging to do.
3. Iron out discrepancies
So you have a cash drawer discrepancy? No worries! This happens to small business owners all of the time.
Most discrepancies are caused by human error, such as giving the incorrect change to a customer or misplacing a credit card receipt.
When balancing your cash drawer, look out for both overages and shortages. An overage is when your drawer is over the amount your POS report says you should have. A shortage is when your register’s total is short.
Shortages could mean cash was either lost, stolen, or counted incorrectly. An overage typically means your customers were shortchanged.
When trying to resolve discrepancies, complete the following steps:
- Recount your cash, checks, coupons, credit card receipts, etc.
- Check in and around your drawer and register for missing information (e.g., receipts)
- Review POS transactions for information, such as credit card transactions (if applicable)
Be sure that someone is recording cash discrepancies on your small business profit and loss statement (P&L). Add a line to your P&L statements to account for cash discrepancies.
4. Record cash drawer transactions
After you count your drawer and check out any discrepancies, record your cash drawer transactions in your books.
When recording your cash register totals, be sure to account for your beginning balance (e.g. $100). Record any cash, credit, store credit (if applicable), checks, coupons, and other sales in your books.
If there are any discrepancies that you could not resolve, account for overages or shortages in a separate column.
Take a look at an example of a balanced cash register below:
| Money Collected | Sales Recorded | Difference (+/-) | ||
|---|---|---|---|---|
| Cash collected | $425.00 | Cash sales | $425.00 | $0.00 |
| Checks collected | $53.25 | Check sales | $53.25 | $0.00 |
| Store credit collected | $233.55 | Store credit sales | $233.55 | $0.00 |
| Credit cards collected | $657.48 | Credit card sales | $657.48 | $0.00 |
| Coupons collected | $11.00 | Coupon sales | $11.00 | $0.00 |
| Total collected | $1,380.28 | Total recorded | $1,380.28 | $0.00 |
So what does it look like if your POS report and your counts don’t match up? Take a look at a drawer with some discrepancies.
| Money Collected | Sales Recorded | Difference (+/-) | ||
|---|---|---|---|---|
| Cash collected | $350.00 | Cash sales | $367.78 | -$17.78 |
| Checks collected | $85.33 | Check sales | $72.55 | +$12.78 |
| Store credit collected | $247.52 | Store credit sales | $247.52 | $0.00 |
| Credit cards collected | $776.38 | Credit card sales | $776.38 | $0.00 |
| Coupons collected | $0.00 | Coupon sales | $2.50 | -$2.50 |
| Total collected | $1,459.23 | Total recorded | $1,453.95 | +$5.28 |
As you can tell, the drawer above is missing $17.78 in cash and $2.50 worth of coupons.
The till also has an additional $12.78 in checks not recorded in sales. When check sales are lower than the total checks collected, it might be due to an employee ringing up a transaction under an incorrect payment method.
Tips for balancing drawers
Balancing cash drawers doesn’t have to be complicated. Use the tips below to help keep your drawer in tip-top shape.
1. Have one person per drawer
When it comes to your cash drawer, the fewer people who access it, the better. Consider limiting the number of people who use each drawer. Limitations allow you to avoid cash drawer discrepancies and can help you avoid workplace theft.
The same idea should go for your cash drawer manager. Limit how many people balance the tills and handle cash drawer accounting at your business.
2. Assign duties
For accountability purposes, assign one or two trusted employees to balance your cash drawer(s). You can assign one person to count the drawer while another employee prepares the bank deposit. Have employees who manage cash drawers sign a report indicating they balanced the drawer.
At the beginning of the next day or the following shift, recount the cash in each drawer to verify that the beginning balance is accurate. If your business uses multiple drawers, assign this task to each cashier and have them count their individual drawer.
3. Utilize sales reports
If you have a POS system, don’t be afraid to use sales reports to your advantage. You can use reports to see a drawer’s beginning, current, and end-of-day balances. Sales reports can help you:
- Avoid having too much cash in a drawer
- Verify if a customer was shortchanged
- Pinpoint employee theft
Sales reports can also give you a glimpse into your cash flow for the day. If you want to see how sales are doing, pull up a sales report.
4. Deposit cash during the day
To keep your cash drawer nice and tidy, consider cleaning it out during the day. So, how can you do that? Deposits.
If you find your cash drawer overflowing throughout the day, make multiple small deposits into your safe or bank to keep your till’s cash count down. Otherwise, you could be dealing with a disorganized drawer and misplaced or stolen money.
Make deposits during slower times throughout the day. That way, you’re not scrambling to remove and count cash.
Depending on the size of your business and your incoming cash, you might need to make multiple deposits throughout the day. If your business is smaller, you can likely skip this step altogether.
5. Look out for consistent discrepancies
If you start noticing cash drawer discrepancies time and time again, something might be up. You might be dealing with stolen funds if cash consistently does not match your POS reports.
Watch out for patterns, such as routine shortages. For example, if you notice an employee’s drawer is constantly off $20, you might need to do some more digging and observing.
Need to account for your cash drawer’s cash flow? No problem! Patriot’s accounting software lets you easily record your business’s income and expenses. Get started with your self-guided demo today!
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This is not intended as legal advice; for more information, please click here.