How to Properly Balance a Cash Drawer

Balancing a cash drawer involves verifying the physical cash against transaction records. This process is fundamental for businesses handling cash, ensuring financial accuracy, and maintaining internal controls. Regular reconciliation helps prevent financial discrepancies and can reduce the risk of loss due to errors or unauthorized activities. It provides a clear picture of daily cash flow, contributing to reliable financial reporting.

Essential Preparations

Before counting, establish a starting point for the cash drawer. This initial amount, known as the “float,” is the cash placed in the drawer at the beginning of a shift to facilitate making change for customers. Ensuring the float is stocked with smaller denominations helps maintain smooth transactions throughout the day.

Gathering all transaction records is another preparatory step. This includes sales receipts, transaction logs, and point-of-sale (POS) system reports, such as a Z-report. A Z-report provides a comprehensive summary of the day’s sales, including cash, credit card, and other payment types, and resets the sales data for the next day. Any records of cash paid out or paid into the drawer, separate from sales, must also be collected. Having a cash count sheet, a calculator, and a secure, distraction-free area for counting helps ensure accuracy.

Step-by-Step Counting and Reconciliation

The counting process begins with organizing and counting the cash in the drawer. Count coins first, followed by smaller bills, and then larger denominations. This systematic approach minimizes errors. Each denomination’s quantity is then recorded on a cash count sheet.

After counting each denomination, the totals are summed to arrive at the total cash in the drawer. This total is then compared to the expected cash amount. The expected amount is derived from the POS system’s Z-report, which details the total cash sales for the period, adjusted by the initial float, plus any recorded cash paid-ins and minus any recorded cash payouts. The objective is for the cash counted to match this calculated expected amount. A discrepancy between the physical count and the expected amount indicates an overage or a shortage.

Investigating Discrepancies

When a cash drawer does not balance, showing either an overage or a shortage, the first action involves re-counting all denominations. A miscount often causes discrepancies. If the imbalance persists after a thorough re-count, the next step is to review the POS report and transaction logs. This review can uncover errors such as incorrect entries, forgotten voids, miskeyed amounts, or issues with returns.

Examining records of cash paid-ins and payouts is important, as unrecorded or incorrectly recorded movements of cash can lead to discrepancies. Checking for any unusual activity or forgotten transactions during the shift may provide clues. Overages can occur if a customer was given insufficient change or if transactions were incorrectly entered, while shortages often result from overpaying customers or unrecorded cash removals. For significant imbalances that cannot be resolved through these investigative steps, reporting the discrepancy according to established business policy is necessary.

Documenting the Balance

After balancing or addressing discrepancies, documentation is the final step. The cash count sheet must be completed with final reconciled totals, and the person performing the count should sign and date it. This signature verifies the accuracy of the count and provides accountability.

Next, the cash designated for deposit is prepared. This involves bundling bills by denomination, rolling coins, and filling out deposit slips. The prepared deposit is then secured for transport to the bank. Finally, the cash drawer itself should be secured for the next shift or the end of the day. All documentation, including the signed cash count sheets and POS reports, should be filed for record-keeping and audit purposes, contributing to internal controls.