3 tips for better cash handling procedures in your small business

Cash loss is a big problem for small businesses. When margins are tighter, each and every loss can have a more significant impact on the bottom line. With errors in cash handling being one of the major causes of cash loss, it’s important that your staff are handling your cash according to effective cash handling procedures; to ensure that small errors in handling or processing don’t add up to big dents in profits.

Why good cash handling is crucial to success

We all know that good cash handling procedures reduce both the opportunity for, and the occurrence of losses. But, you’d be surprised how many businesses fail to ensure that their staff are properly trained in good cash handling.

For many small businesses such as takeaways, convenience stores, or bakeries that operate with just a few staff on shift throughout the day, cash handling, cash management and banking can often be the sole responsibility of just one person per shift.

But if cash handling procedures are lax (or non-existent), this means that cashiers are left to operate autonomously; each with different ideas and around what constitutes good cash management. These inconsistencies can lead to wasted time, inefficiency, incomplete or skipped tasks, a loss of accountability or even a loss of visibility of your cash.

Clearly, good cash handling is crucial to the success of your business. Below are 3 tips to ensure better cash handling in your small business:

1. Implement cash handling guidelines: The first step in ensuring that your employees handle your cash more effectively is to ensure that everyone is following the same process. This is particularly important in small businesses where staff may be left alone for long periods of time or have sole responsibility of cash handling activities throughout their shifts. Proper cash handling procedures (and training) will ensure that your staff are able to follow the same process when working autonomously.
2. Be strict about discrepancies: The odd cash loss here and there might not seem like a big deal. But it could be an indicator of a much bigger problem. Encourage staff to handle cash with care and ensure that they are aware that all discrepancies are recorded and monitored. This can encourage accountability and may actually reduce the level of cash loss in your business. For those discrepancies that do make it on to the books, make sure you analyse them effectively. Do these discrepancies only occur when certain staff are on shift? Are the losses little but often? Are your cash drawers never ‘over’ or ‘up’ against the expected takings? All these scenarios could point towards a calculated and deliberate attempt to defraud your business. Ensure that all losses and ‘overs’ are recorded so that you can gain full visibility of any cash loss in your business.
3. Discourage the use of a slush fund: In many small businesses, cash shortfalls are seen as the responsibility of the cashier themselves, and many staff are encouraged to make up these losses from their own pocket. But, the consequence of this is often the creation of a ‘slush fund’ by employees. When the drawers are up, any surplus cash is kept and used to make up the difference the next time a drawer is short. While this might seem like good practice, using a slush fund means that the true picture of cash loss is hidden and that you lose visibility of the extent of the problem. Plus, the slush fund blurs the boundary between what is seen as the business’s money and that which is un-claimed. This mindset could lead even the most honest staff to steal what they see as the “surplus”. It’s a potentially exploitable system – creating an environment where dishonesty can flourish.

The right tools for the job

Of course, there are a number of innovative cash management technologies that could aid better cash handling in your business. Cash counters can help count your cash quickly and accurately, cash management software could help guide employees through their daily cash management tasks, and intelligent cash drawers will enable you to eliminate your cash loss at source.

However, despite the advancements in cash handling and cash management technology, there is still a human element involved with the majority of cash transactions. This means that your employees are one of the most effective weapons when it comes to reducing the level of cash loss in your business. Ensure that they are properly trained in, and are happy to follow, strict cash handling procedures.

Because if your staff aren’t trained on cash handling procedures, if you don’t have a strict process to tackle cash loss, or if the true extent of losses are being covered up, ask yourself this; is your cash really in safe hands?

Learn more about cash handling best practice. Download the guide to cash handling best practice for your business.