How to Properly Reconcile a Cash Drawer

Cash drawer reconciliation is a routine financial control procedure that ensures the physical cash held in a till aligns with sales transaction records. This process helps businesses maintain accurate financial statements, detect discrepancies, prevent losses, and promote accountability. By regularly reconciling, businesses can identify potential errors, prevent losses, and uphold financial integrity.

Gathering Your Tools and Information

Gather all necessary tools and information for efficient and accurate reconciliation. A calculator is needed to total denominations and compute the final cash. A cash reconciliation form records each denomination count, providing an audit trail and noting discrepancies.

A pen is also necessary for completing the form as counting progresses. Access to the Point of Sale (POS) system’s end-of-day report is important, providing the expected cash balance for comparison. Finally, the opening cash balance (till float or change fund) must be accounted for.

The Counting Process

The physical counting of the cash drawer begins with organizing and separating all currency by denomination. For paper currency, it is a common practice to stack bills of the same value together and then count them in bundles, often in groups of twenty, to ensure accuracy and speed.

Each denomination, from one-dollar bills to one-hundred-dollar bills, should be counted meticulously and recorded on the reconciliation form. This systematic approach helps prevent miscounts and provides a clear record of the quantity for each type of bill.

Coins should also be counted carefully, either by using a coin sorter if available, or by manually counting and grouping them. After counting, these amounts should also be accurately noted on the reconciliation form, ensuring that the number of each coin type is documented.

Any other forms of tender present in the cash drawer, such as checks, gift card receipts, or credit card receipts, must be separated and counted. While not physical cash, their totals must be recorded separately on the reconciliation form to reflect all items managed within the drawer. Once all currency and other tender types have been counted and recorded, the final step in this process is to calculate the total physical cash count.

Comparing and Resolving Differences

After the physical cash count, compare this total against the expected cash balance from the Point of Sale (POS) system’s end-of-day report. Subtracting the physical count from the expected POS balance reveals any “over” or “short” amount, indicating a discrepancy. For instance, if the POS system indicates an expected cash balance of $500, but the physical count is $495, there is a $5 shortage. This calculation determines whether the drawer is balanced, over, or short.

Should a discrepancy be identified, a systematic investigation is then undertaken. The initial step is to meticulously re-count the entire cash drawer to ensure no counting errors occurred during the first pass. Following this, the POS report should be thoroughly reviewed for any transactional anomalies, such as voided sales, returned items, discounts, or miskeyed transactions that might affect the cash balance. It is also important to check for any unrecorded cash payouts or cash received that might not have been properly entered into the system.

Any overage or shortage, along with the steps taken to investigate it, must be thoroughly documented on the reconciliation form. This documentation provides an audit trail for accounting purposes and helps in identifying recurring issues or training needs. Finally, after the cash drawer has been reconciled and any discrepancies addressed, the reconciled cash is prepared for deposit, and the till is secured for the next operational period.