In an age of credit card chips and tap to pay, cold hard cash is not used the same way as before. Your customers have often paid for their purchase with a plastic card or an aluminum phone.
But, that doesn’t mean that cash has become an obsolete form of payment.
In 2020, 20% of US transactions were paid in cash, according to Statista. That’s one-fifth of all transactions, a sizeable chunk in the grand scheme of things. And that number is often even higher for cannabis businesses.
With that said, if an average of 1 out of every 5 customers will pay in cash, your business has standard cash handling procedures… or at least, it should.
If you’re saying “Yep, we totally have standard cash handling procedures,” while crossing your fingers behind your back, or know you’ve got something solid in place and wonder if it could be better, let’s dig into define cash handling and explore best practices.
Cash Handling 101: What You Need to Know
In essence, cash handling is how you log the cash that comes in and out of your business. This includes counting the cash you have on hand, the cash your customers bring in, the tips left, petty cash, and more. They also cover your vault if your cashiers regularly need smaller bills or coins and someone needs to do trades.
Cash handling can be overwhelming if you have no experience, so let’s start by discussing the cash log.
The best way to keep track of your cash is through a cash log. A cash log can be a templated form or an online platform to stay organized and consistent. Some businesses use legal notepads, but we typically recommend against this. Cash logs look a lot like check registers — they cover the essential questions – who, what, when and how much.
With a cash log, you keep track of each transaction, knowing exactly how much money is coming in and out of your doors. Cash logs help both in the short term and the long term, as knowing your cash amount is essential for your day-to-day proceedings and your quarterly/annual taxes. Cash logs also help you understand who has accessed the money, keep your team accountable, and prevent any mishandling (aka someone with sticky fingers).
Another necessary procedure to follow is a drawer countdown. You should complete drawer countdowns at the beginning of each shift and the end of each shift. Two people should be on hand for this – one person will need to sign off for an initial count, and the other will sign to verify as a secondary counter.
Completing a drawer countdown consists of counting each coin or dollar in your register and organizing them by monetary denominations. For example, if you had 100 pennies, 50 $1 bills, and 10 $20 bills, you would mark 100 in the .01¢ category, 50 in the $1 category, and 10 in the $20 category. Typically, you will count from the biggest denomination to the smallest denomination.
You should record your total count on a drawer countdown sheet. At the beginning of the shift, you will report the date and the total amount of cash in your drawer. Then, an additional team member will then recount, and the two counters will sign off.
At the end of the shift, you report the day’s sales and how much you are over or short from the morning’s count. Once registered, you will again have an additional team member recount the cash, and both counters sign off.
Congratulations! You’ve completed our cash handling 101 crash course. Now, it’s time to get into some more specifics.
Who’s in Charge and When to Count
We’ve established what cash logs and drawer countdowns are and that some cash handling procedures require more than one person to complete. So, who should be in charge of cash handling?
Typically, the person handling the cash should be the first person to verify a drawer countdown. This person can be a sales lead or associate, depending on your team composition. Your second verifier should be a manager.
Including a manager in the mix will keep upper management up to date on what kind of cash is coming in and out of business. Management can also iron out any discrepancies, from being .01¢ off to $100 off.
Completing a cash log for each transaction and a drawer countdown before and after every shift is not the end-all-be-all of cash management.
Any time you leave your drawer behind, you must reverify your cash. This includes counting when you change funds or cash drawers from one register to another. Counting your drawer ensures that you are always on top of the petty cash of your business.
Best Practices for Small Businesses
Typically, you should complete these procedures within a Point-Of-Sale (POS) system to track and verify all transactions (not just the cash ones). A POS system also provides an extra layer of verification when counting the cash.
However, it is not always possible for some small businesses, like a cannabis company, to track every single cash exchange With this in mind, I suggest investing in a quality cash counting system.
A quality cash counter will take some guesswork out of cash handling and give you some ease of mind, so you don’t wake up at 3 a.m. and wonder, “Did I miss any of the bills that stuck together?” Because that’s the kind of stuff that can keep you up at night.
As always, our team is here to help. If you have any additional questions about cash handling or cash handling for your business, feel free to get in touch with us. We would be happy to help your business thrive and grow.