Brighter business / How your business needs to be handling cash

How your business needs to be handling cash

8th August 2016

This is a guest post written by Andy Margison, founder of ZZap, the cash handling retailer.

Despite advances in card technology, individuals still choose to pay by coins and banknotes for 52% of their transactions, according to the Payment Council. With polymer banknotes and the new £1 coin coming out in the near future, cash is still very much in the game.

However, the way your business handles cash could be losing you money. Unless you have implemented a proper cash handling policy, it’s likely that you’re unaware whether your cash handling practice is losing your business money or not.

Read on to find out more about the best cash handling policies and procedures, plus information about which types of safes complement a good cash handling process.

Why learn about cash handling?

To put it simply, good cash handling can eliminate cash loss, save time and improve accountability.

Cash loss is a big problem in small businesses. An estimated 64% of small businesses are affected by employee theft, with just 16% reporting the crime. 10,315 employee theft cases were reported in 2013/14. Although the figures have decreased in recent years, it is worth noting that the majority of employee theft goes unreported or even unnoticed. Employee theft and fraud cost British businesses a massive £1,681 million pounds in 2012/13 and to add to that, in the same year £995 million was spent on security and loss prevention. Without cash handling policies, it’s tempting for cashiers to cut corners or get into bad habits, which can lead to wasted time, skipped or partially complete tasks, or errors. Furthermore, lack of control means no accountability, so even if you trust your cashier it can be hard to tell if they’re doing the job correctly.

Further cash handling inefficiencies can be attributed to a lack of (or non-existent) cash handling equipment. Percentage-wise, British Pound Sterling is one of the most counterfeited currencies in the world. With nearly £5 million counterfeit banknotes found in 2015 alone, it’s important to have effective counterfeit detectors at the point of sale. Like employee theft, counterfeits are taken straight from your bottom line profit. Another way to significantly increase efficiency is to use a cash counter. Cash counters can count cash faster and more accurately than even the most experienced cashier. Finally, point of sale safes are integral to a secure cash handling process. Cash handling specialists such as ZZap Ltd help you choose the right equipment to eliminate human error, increase efficiency and reduce cash loss.

Policies and procedures

A cash handling policy is set of rules to control the way cash is handed. Cash handling policies normally focus on reducing cash loss, however they can also help increase efficiency and reduce human error.

These are the key areas to include in a cash handling policy:

1. Background checks and dependability

If your employee is going to be trusted with your cash, you should make sure they are trustworthy.

For new employees, check the validity of their statements on their CV or application. Studies show one-third of all applications contain dishonest statements. It’s a good general practice to do background checks on your employees to check for any unspent convictions (find more information on this on the website).

A good background check can also provide information on whether an applicant has cash-handling experience, which can be backed up by asking for references from previous employers.

2. Significant amounts of cash should never be handled by one person

If you watch police, armoured service technicians and clerks depositing cash into a safe, they are often in pairs. High risk tasks need two people present; one to carry out the activity, the other to monitor safety and oversee the task. Whether the cash is being transported, put in a safe or counted, having two people present significantly reduces the risk of errors and cash loss.

3. Separate duties

When multiple people share the responsibility of the entire cash handling process, the chances of theft and inefficiency significantly decrease.

‘Duty separation’ splits up the cash handling process into smaller tasks where each task is carried out by a different person. This means each person in the process becomes accountable to the others, plus the process becomes more efficient.

4. Create accountability

Duty separation goes hand in hand with creating accountability. You should know where your cash is and whose responsibility it is at all times.

Each task should be designated to an individual and they should be made fully aware that they are responsible for that part of the cash handling process. The employees also need to record their cash activity through receipts and records. Once accountability is established, irregularities or discrepancies can be traced and eliminated.

5. Keep the amount of cash in the till to a minimum

If a robber held-up your store it would be very wise to hand over the money. However, it is up to you how much cash is available in the till.

Throughout the day the amount of cash in your cash drawer will increase, so potentially you have more to lose. Therefore it’s necessary to make regular cash deposits into a POS (point of sale) safe or a secure location to keep cash in the till to a minimum. Furthermore, employees are likely to think if they steal from a cash drawer with plenty of cash there’s a higher chance their theft will go unnoticed.

6. Don’t use a slush fund

A ‘slush fund’ is used to offset the cash surplus or deficit in the till. If at the end of the day there’s a cash surplus, this is added to the slush fund. If there are cash shortfalls, this is taken from the slush fund to make up the difference.

Although this may seem effective, it hides the true picture of your overall cash deficit and you can quickly lose sight of the problem. Slush funds by nature blur the divide between company money and ‘un-claimed’ money, leading even the most honest employees to take what they think is surplus. Ultimately it’s an environment where employee theft can flourish undetected and cash-handling mistakes can go unnoticed.

7. Communicate the policy regularly and effectively

An effective cash handling policy needs to be clear and straight forward to avoid confusion.

Procedures and policies should be communicated to your employees through notices around the workplace, regular emails, content in the employee handbook, etc. These points of contact make sure the policy is fresh in their mind.

It’s also necessary to have an individual meeting with each employee explaining the policy. This way, employees can ask questions and are ultimately held more accountable to the rules. The more frequently the policy is communicated the more your employees will respect the rules.

Finally, make sure you stick to the rules vigilantly yourself, or your employees won’t.