In a recent posting on a listserv I subscribe to, someone inquired if any other jurisdictions have a policy that requires employees who handle cash to make up shortages from personal funds.

Most offices I’m familiar with have cash over and short accounts that track cash overages and shortages incurred by cashiers. I don’t know of any utilities or local governments that require cashiers to make up cash shortages. If they did, would the same cashier be entitled to keep any overages? I think it’s pretty easy to see why that wouldn’t be a good idea!

Even the best cashiers make mistakes

When making change, even the best cashiers make mistakes so an occasional cash overage or shortage is to be expected. However, repeated overages and shortages may be indicative of an employee who either isn’t diligent in doing their job or is just plain dishonest. The best way to deal with this is to follow good internal controls and have a cash handling policy in place.

Internal controls

Ideally, every cashier should have their own cash drawer. I realize that many smaller offices share a single cash drawer, but if you are experiencing cash balancing problems the only way to identify the responsible party is for each cashier to be accountable for their cash.

Hand written receipts should be avoided. This is 2012 and if your software isn’t capable of generating a receipt for all types of payments, including small cash purchases such as making copies or notarizing documents, it’s time to look for new software!

At the end of the day, cash should be counted by the cashier and double checked by a supervisor. Totals for cash, checks, money orders and credit cards should be verified against the day’s collection reports and matched to the bank deposit.

Elements of a good cash handling policy

A good cash handling policy should identify quantifiable measures to determine if a cashier’s performance measures up to acceptable standards. These measures include:

  • ŸNumber of overages/shortages within an established time period (i.e. 30 days)
  • Number of overages/shortages exceeding a specific amount (i.e. $5.00) within an established time period
  • Cumulative overages/shortages exceeding a set amount (i.e. $50.00) within an established time period

It should also establish a limit for any single shortage (i.e. $100.00) that is immediately reported and investigated.

The policy should also clearly state what actions (i.e. additional training, probation or termination) will be taken if the employee’s handling of cash does not improve.

Is it time to review your cash handling policy?

Have you reviewed your cash handling policy recently? If not, this might be a good time to do so.

If you don’t have one, I encourage you to develop and adopt one.

If you would like assistance developing or reviewing your cash handling policy, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

© 2012 Gary Sanders

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