If you lost 5% or more of your sales and you just can’t explain how it happened, would that be bearable or terrible for the financial health of your business? Cash shortages can be understandable. Tellers handle transactions involving cash, credit cards, gift cards, checks, traveler’s checks, and any number of discounts and coupons. When transactions go wrong for any reason, they should be voided, not sold, refunded, discounted, or reduced in price in some way. During interactions with the public, they may encounter attempted credit or gift card fraud, bounced checks, counterfeiting, price gouging, quick change schemes, theft, withdrawals, or some other new scam of the day. The teller is expected to know all of these transactions, handle them smoothly, and yet have a perfect cash drawer at the end of the shift.

But what if they don’t? What if cash is short? And how short does the cash register have to be to get your attention? Some owners and/or managers create a policy that shortages must be repaid. There are many reasons why this is not a sensible policy and is against the law in some states. Frequent overflows from the cash register are also undesirable. Surpluses can be indicative of poor cash management or worse, cash transaction tampering and theft.

So how much cash shortage or surplus is acceptable within the framework of your business? Knowing that a perfectly balanced cash register is impractical in a blind remittance procedure, what is bearable? More importantly, are cash management policies in writing, are performance expectations clear, and are disciplinary actions for excessive cash overs and unders fair and consistent?

Establishing “bearable”

• Policies and Procedures: Establish written policies, procedures, and expectations in handling transactions. They should include verification of shift count before and after, single drawer responsibility, manager authorizations for voids, refunds, overages, and closing the cash drawer after each transaction. Calculators and unauthorized credit card “skimming” devices near cash registers should be prohibited and stated in the policy.

• Blind Remittances – At the end of their shift, cashiers should not be aware of the cash totals on the ‘Z’ tape as they count down their cash register. They must report what they have in their box, less the initial bank.

• Communicate expectations: Communicate expectations related to cash management and security through a written memo, employee handbook, and as part of daily operations.

• Signed Teller Policies – Have each teller sign cash handling expectations. Retain in your individual personal files.

• Give Change: Teach cashiers the habit of counting change to the customer.

• Shortage and Excess Cash: Set a tolerable dollar amount of short or excess cash. Some businesses have set a range of $3 to $5 per individual cash drawer per clerk, depending on the number of cash transactions and total sales per shift. Also set an amount added during the course time; that is, 0.1% of sales each month.

• Set an Acceptable Level of Exceptions: Set acceptable performance standards in the number and dollar amount in percentage of sales for voids, ringbacks, refunds, no sales, verification average, and others that are relevant to your business.

• Cash Drops – Managers must remove excess cash and large bills from the register and place them in the safe.

• Train: Train tellers on how to handle all transactions, including handling suspected counterfeits and common scams involving credit/gift cards and quick change.

Once policies and procedures are in place, expectations are clearly communicated, and tellers 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 occur and cash handling performance is not within established guidelines, appropriate steps must be taken to correct the behavior or performance and bring them into compliance. If individual teller performance is routinely outside established acceptable performance levels, it becomes “terrible” and should 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 a progressive discipline process consisting of warnings, written reprimands, and termination for poor cash handling performance that does not meet acceptable standards.

• Investigations: Investigate large shortages or unexplained excesses to determine the cause. Large unexplained discrepancies should enter the progressive discipline process at a higher and more serious level, ie Suspension, Termination.

• Retrain – Retrain tellers who do not meet performance standards.

• Reassign – Reassign tellers who do not meet cash management standards to a non-cash position, if available.

• Policies and Procedures – Reassess policies and procedures related to cash management, security processes, and disciplinary actions and make any necessary adjustments based on your business needs.

Handling customer transactions is hard work, even for the most experienced and conscientious cashier. Mistakes happen and unexpected shortages and surpluses occur. The key to successful cash management operations is strong policies and procedures, clear expectations, regular audits, and consistently applied and fair progressive discipline. Your scarcity will quickly respond from “terrible” to “bearable”, increase profitability and make you more competitive in the market.

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