That said, it’s often the case that a lot of businesses fail to have the correct bookkeeping procedures in place. This could leave them open to problems later down the line, for example profits could take a hit if small cash handling errors and cash flow aren’t kept in check.
Good cash-handling practices can help to reduce cash loss, ensure accountability and save time. And without them, business owners could get into some bad habits as a result. To ensure you’re streamlining your cash flow, here are a few handy hints and tips that your business can use when looking after its cash.
For small businesses like takeaways, newsagents and bakeries, for example, who are likely to only have a few members of staff on shift throughout the day, the responsibility of cash handling often lands on one person’s shoulders. If cash-handling procedures are on the slack side (or don’t exist at all), then the cashiers are left to their own devices, with individual approaches to cash management. This can negatively affect your business if it goes unresolved.
If people under your employ are going to be handling cash, you’ll need to make sure they’re trustworthy enough to do so. When hiring new employees, be sure to check the validity of their statements on their CV, along with background checks, either for a history of convictions or whether they’ve had previous cash-handling experience.
Establishing consistency by ensuring everyone follows the same process is key to more effective cash handling, especially if staff are to be working alone for long periods of time. Training them up on the right procedures means everyone will be able to follow the same process while working autonomously.
Noticed instances of cash loss here and there? It might only be a small amount, but it could well be an indicator of a bigger problem. Make sure that staff are recording and monitoring any discrepancies they come across. Not only will it help with reducing the level of cash loss, but it’ll encourage accountability, which we’ll talk about in more detail later on.
When discrepancies have been recorded, conduct thorough, effective analysis on them. Do you notice any patterns when certain staff are on shift? Are the amounts lost small but frequent? Are the contents inside always less than your expected takings? Even the smallest discrepancies and patterns of cash loss could show a deliberate attempt to defraud your business, so make sure any losses are recorded so you can gain full visibility of any losses.
Some small businesses view cash shortfalls as the responsibility of the cashier themselves, and staff are encouraged to make up these losses out of their own pocket. This practice creates a ‘slush fund’; when amounts exceed expectations, the leftover surplus is added to the fund. If cash falls short the next time, money from the slush fund is used to make up the difference.
This is only a temporary solution and only serves to hide the extent of any cash loss problems facing your business. Additionally, this doesn’t solve the root of the problem, and only covers up mistakes/theft. Make the distinction between company money and ‘un-claimed’ money as clear as possible by avoiding the slush fund.
Many cash loss problems are solved with accountability. Make each stage of the cash handling process the responsibility of respective individuals. For example, someone counting the cash has to then hand it over to the person in charge of the safe, who will then hand it over to someone else who verifies the amount and deposits it. The more staff involved in the process, the easier it is to identify at which stage the cash loss occurred.
Similarly, it’d be wise to make sure large amounts of cash are only ever handled by multiple people; one to carry out the activity, the other to monitor safety and oversee the task. This helps to greatly reduce the risk of errors and cash loss.
In the event of theft or robbery, you’ll likely have no choice but to hand over the money that’s in the till – but how much is there in the first place is entirely up to you. As the amount in the till increases, you potentially have more to lose, so it’s wise to make regular cash deposits into a point of sale safe or other secure location to keep cash in the till to a minimum.
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