Friday August 28 , 2015

LossBusters Blog

Nuggets of wisdom from Libby
Tags >> Cash handling
Mar 29

Your Tolerance for Cash Shortages – Bearable or Terrible?

Posted by: Libby | Comment (0)

If you lost 5% or more of your sales and it just can’t be explained how it occurred, would it bearable or terrible to the financial health of your business?  Shortages in cash may be somewhat understandable.  Cashiers handle cash transactions, credit cards, gift cards, checks, traveler’s checks, and any number of discounts and coupons.  When transactions go awry for some reason, they must void, no sale, refund, discount, or reduce the price in some way.  During interactions with the public they may encounter attempts at credit or gift card fraud, bad checks, counterfeit, price changing, quick change schemes, drive-offs, walk-offs or some other new scam of the day.  The cashier is expected to know all of these transactions, handle them flawlessly, and yet have a perfect cash drawer at the end of the shift. 
But what if they don’t?  What if the cash is short?  And how much does the cash till have to be short to get your attention?  Some owners and/or managers create a policy that shortages must be paid back.  There are many reasons why this is not a sound policy, and against the law in some states.  Frequent cash drawer overages are not desirable either.  Overages may be indicative of poor cash management or worse, manipulation of the cash operation and theft.

So, what amount of cash shortage, or overage, is acceptable within the framework of your business?  Knowing that a perfectly balanced cash drawer is not practical in a blind remittance procedure, what is bearable?  More importantly, are cash handling policies written, performance expectations clear and disciplinary actions for excessive cash overages and shortages fair and consistent?

Establishing “Bearable”
•    Policies and procedures - Establish written policies, procedures, and expectations in handling transactions.  They should include before and after shift count verification, single drawer accountability, manager authorizations for voids, refunds, over rings, and closing the cash drawer after every transaction.  Calculators and unauthorized credit cards “skimming” devices near the cash registers must be prohibited and stated in policy.

•    Blind remittance – At the end of their shift, cashiers should not be privy to cash totals on the ‘Z’ tape as they countdown their cash till.  They should report what they have in their till, minus the beginning bank.

•    Communicate Expectations – Communicate cash management and security related expectations via written memo, employee handbook, and as part of everyday operations.

•    Signed cashier policies – Have every cashier sign cash handling expectations. Retain in their individual personnel files.

•    Making Change – Teach cashiers the habit of counting back change to the customer.

•    Cash shortages and overages – Establish a tolerable dollar amount of cash shortage or overage.  Some companies have established a $3-5 range per individual cash drawer per cashier depending on the number of cash transactions and total sales per shift.  Set an aggregate amount over the course time as well; i.e.  .1% of sales each month.

•    Establish acceptable level of exceptions – Set acceptable performance standards in the number and dollar amount in percentage to sales for voids, over rings, refunds, no sales, check average, and others that are pertinent to your business.

•    Cash drops – Managers should remove excess cash and large bills from the cash register and place in the safe.

•    Train – Train cashiers on how to handle all transactions, including handling suspected counterfeit, and the common scams involving credit/gift cards and quick change.

After policies and procedures are established, expectations are clearly communicated, and cashiers are properly trained, it’s time to routinely evaluate their performance.  Emphasis should be placed on operating the cash function with minimal errors.  When errors do occur and the cash handling performance is not within established guidelines, the appropriate action should be taken to correct the behavior or performance and get them in compliance.  If the individual cashier’s performance is routinely outside of the established acceptable performance levels, they move into “terrible” and must be dealt with accordingly.

Dealing with Terrible
•    Formal cash management reviews - Establish a formal cash management performance review process.  (Daily, Weekly, Monthly)

•    Progressive Discipline – Implement progressive discipline process consisting of warnings, written reprimands, and terminations for poor cash handling performance that is not in compliance with acceptable standards.

•    Investigations – Investigate large unexplained shortages or overages to determine the cause. Unexplained large discrepancies should enter the progressive discipline process at a higher, more serious level, i.e. Suspension, Termination.

•    Retrain – Retrain cashiers that are not in compliance with performance standards.

•    Reassign – Reassign cashiers that are not in compliance with cash management standards to a non-cash position, if available.

•    Policies and procedures – Reevaluate policies and procedures relating to cash management, security processes, and disciplinary measures and make adjustments according to the needs of your business.

Handling customer transactions is a tough job, even for the most experienced, conscientious cashier.  Mistakes happen and unexpected shortages and overages occur.  The key to successful cash management operations is to have sound policies and procedures, clear expectations, routine audits, and fair and consistently applied progressive discipline.  Your shortages will quickly respond from “terrible” to “bearable”, increase profitability, and make you more competitive in the marketplace.

For more information on security, safety, loss and crime prevention for restaurants, visit For daily tips on restaurant loss prevention, follow on Twitter @LossBusters

Jun 07

It’s counterfeit! Now what do we do? – Part 3

Posted by: Libby | Comment (0)

The training of our employees in detecting counterfeit currency, or the device we use to authenticate currency, just paid off.  A counterfeit bill is detected!  So, what do we do now?  Do we confront the passer?  Refuse to accept it?  Call the police?  What’s the next step?

According to the Public Affairs Office of the Secret Service, $78.7 million in counterfeit currency was passed in the U.S. last year.  The threat to your business coming in contact with a counterfeit bill is high.  Using bill authenticators may be in your loss prevention strategy.   Training your employees on how to detect counterfeit, and what to do when it occurs is an essential element of loss prevention and cash management plans.  Good training will avoid losses and protect your employees, the business, and the Brand.

May 21

Is it real or counterfeit? Part 2 – Detection devices

Posted by: Libby | Comment (0)

Part 1 of “Is it real or counterfeit?” gave practical tips in teaching cashiers how to detect counterfeit currency.  Anti-counterfeit technology has been embedded in US currency.  Tips on detecting counterfeit refer to a few of these features.  The “feel” and “look” of the bill is a great start.  The printing on genuine bills will feel slightly raised and will appear clear and crisp.  The numerals in the bottom right corner will shift colors from black to green or copper to green when tilted back and forth.  Watermarks of the portrait images can be seen from both side of the bill. 

Oct 31

The art of building a bank

Posted by: Libby | Comment (2)

It has nothing to do with concrete blocks and mortar. Cranes and bulldozers are not involved, and it has no reference to the facility where you make your deposits or take out a loan.  The first time you encounter it, you may think you’re ahead of the game.  What it may all mean is the foundation for a scam to steal hard earned cash from the register.  Building a bank, also known as “padding the register” is part of a theft scheme and you may never know it without a keen sense and knowledge of how it’s done and the skills to do something about it.

Jul 18

Who does it hurt really?

Posted by: Libby | Comment (0)

At a big box home center this week my wife and I picked out base cabinets for our laundry room.  We needed two but there was only one in a box on the large shelf.  I was about to ask if there was another cabinet in stock but luckily I found a second one that had been a display model and was marked down 10%.  Yeah for us. 

Jun 16

What makes you say that?

Posted by: Libby | Comment (0)

I met with a potential client this past week.  It was a referral from a current client that knows I can help this business with their many in house “issues”.  The manager of the business said that he suspected an employee of stealing and perhaps bringing drugs into the workplace.  When I asked, “What makes you say that?”  He then related that the employee in question changes addresses, moving from friend to friend.  One of those former roommates told him that his employee frequently brought home unpaid merchandise for them all to share.  There were also unexplained cash shortages on the community cash register during the shifts the employee was working. 

Jun 07

A little requires a lot

Posted by: Libby | Comment (0)

Most every retailer and restaurant has one.  They come in all shapes and sizes.  They are contained in everything from envelopes to shoeboxes, and are kept in file drawers, office desks and company safes.  The size of it depends on the needs of the business.  On one hand they are handy and necessary and on the other they can be a source of greed, theft and manipulation.  What is it? - The Petty Cash Fund.

May 03

Make the connection to better food cost

Posted by: Libby | Comment (0)

As an industry we are facing the continuous rise of commodities that adversely affect our businesses.  The rising price in grains and feed affect the price of raising cows, pigs, and chickens increases price for milk, eggs and of course the meat and poultry.  Efficient use of these staples in our restaurants is essential in remaining competitive in the marketplace.  This translates into food cost.  We can’t afford to waste the food we sell either in the inefficiencies of converting raw product into sales– or theft. 

Mar 15

Cut Costs by Trimming Fees

Posted by: Libby | Comment (0)

In these trying times, every penny added to the bottom line counts heavily towards profitability. We search in ways to cut costs and still give the customer the experience that will keep them satisfied and coming back. It is one of the reasons loss prevention is so important and yet so over looked. Profit and Loss statements are scrutinized and one very important element that can be a drain on profitability may be overlooked because it becomes so routine – banking fees.

Jan 25

Cash Is No Longer Good Here

Posted by: Libby | Comment (0)

Two weeks ago I wrote about a city employee in Monroe, LA who stole thousands of dollars from her employer while collecting cash payment for lodging and shelter rentals at a city facility (see "Financial Controls Somewhat Limited", Jan.11, 2011).  I mentioned the absence of financial accountability and audit processes as a key ingredient in the “theft triangle”.   Because of the lack of accountability, there was a perceived low risk of detection, which lead to motive for stealing the cash. 


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