Small businesses that deal in cash like food trucks and salons need to protect themselves against errors involving cash and theft. Here’s 20 cash handling best practices your business should follow so everything runs smoothly.
Cash Handling Best Practices
Eliminate Slush Funds
Cashiers in small retail stores are often expected to make up for shortages from their own pockets. This can lead to an employee slush fund to pool resources. It’s generally a bad idea that can hide the real reason the drawer goes short. If you use one of these, get rid of it.
Be Strict About Differences
A few dollars short here and there might not seem like a big deal at first in a small diner that has a good lunch crowd. However, ignore discrepancies and you might be glossing over a bigger issue. Recording all losses and overages helps to uncover anything deliberate.
Standardize a Process
Everyone needs to be on the same page when staff is handling cash on your small fleet of food trucks. Putting together a one-size-fits-all set of rules takes the guesswork out of handling cash for employees that work autonomously.
Know the IRS Obligations
You need to know what the government expects as far as cash transactions go. There’s no way around performing your due diligence. For example, large cash payments over $10,000 need to be handled a certain way. If you’re in doubt, check with the IRS or your accountant.
Have a Petty Cash Account
Having some petty cash on hand to make change for customers in your laundromat makes for a great competitive advantage. Opening a business checking account to fund one keeps your bookkeeping above board.
It’s not a problem when regular clients want to pay in cash at your nail salon. You only need to issue them an invoice.
Don’t Mix Up Accounts
All the cash your business handles needs be recorded and stored separately and proper bookkeeping procedures need to be followed. For example, never take some customer cash payments to replenish petty cash.
Have a Schedule for Handling Cash
If you run a small retail outlet in the local mall, your days might be hectic. Depositing, counting and balancing your cash should follow a strict schedule. Work that routine around your busy times of day.
Have Upper Limits
Avoiding theft and lost monies is also about keeping a limit on how much you keep in the registers and on hand. Keeping this simple means having an upper ceiling on how much you have on site.
Invest in Cash Technology
Smart safes make the job of handling cash more efficient. These track cash transactions and can even schedule pickups. Counterfeit detection technology is another must have for cash businesses like smaller restaurants.
Limit the Employees Who Handle Cash
Effective cash management starts with assigning the responsibilities to supervisors. They should be responsible for reviewing transactions and other duties like recording receipts.
Don’t Share Cash Drawers
Mistakes happen in restaurants and retail stores when people share a common cash drawer. It might be convenient in a restaurant to have a waiter cover someone who is on break, but there’s a lack of accountability there. Everyone should have their own assigned cash drawer.
Don’t Round Numbers Off
It’s called dollars and cents for a reason. David S. Peters is an expert on the subject in the restaurant world. He says rounding off the nightly deposit by leaving coins out can only lead to accounting headaches down the road. Don’t try and save time by avoiding loose change.
Use Accounting Technology
Using the latest technology can help you manage the cash for your hardware store. Don’t assume the big names in accounting software only cater to the big box stores in your field. For example, QuickBooks makes setting up a petty cash account easy.
Tweak the Process Continually
You should always have an eye to improving your cash handling systems. That includes changing the responsibilities you assign to employees as you see fit.
Concentrate on Counting
You might even be a sole proprietor on a busy food truck. If you’re handling cash transactions, you need to concentrate. If you get interrupted, always start over again from the beginning when counting.
Always be Consistent
When you‘re counting the money yourself, you need to do it the same way every time to avoid mistakes. Coins first and then bills going from lowest to highest denominations is one template.
Use a Deposit Template
Texas A&M University suggests a best practice for preparing a cash deposit. Only one currency per bundle with all the bills facing up. Don’t use paperclips. A rubber band is the best way to hold bills together.
Keep Duties Separate
Checks and balances are important when your small business is handling lots of cash. The people who handle the money should be different than those responsible for book keeping.
Count in Private
Security is always a number one concern for a small business that owns vending machines. Only count money when you’re away from the public or employees. If you store your cash in a safe, change the combination regularly.