How to perform a daily cash reconciliation

What is cashing up and why is it important?

Cashing up is the process of counting the money in your till at the end of the day and matching it against the sales recorded by your point-of-sale (POS) system. It’s a vital daily habit for any business that handles cash. Performing this check consistently ensures your takings are correct, helps you identify any discrepancies straight away, and keeps your financial records accurate from day one.

A regular cashing up routine helps you to:

• Spot errors quickly: Identify issues like staff giving incorrect change or ringing up a sale incorrectly.
• Deter theft: Knowing the cash is checked daily is a powerful deterrent against internal theft.
• Maintain accurate records: It provides a clear and correct daily record for your bookkeeping and accounting.
• Manage cash flow: It gives you a precise understanding of your daily cash income, which is crucial for managing your business's finances.

How to perform a daily cash reconciliation

Follow these steps at the end of every business day to ensure your cash is accounted for. It’s best to do this in a secure area away from customers.

1. Print your end-of-day report: Your till or POS system will have a function to print a summary of the day's sales. This is often called a 'Z Report'. This report shows the total sales value and breaks it down by payment type (e.g., cash, card, voucher).
2. Count your starting float: The float is the fixed amount of cash (notes and coins) you put in the till at the start of the day for giving change. Count this first and set it aside. For example, you might start every day with a £100 float.
3. Count the day's takings: Now, count all the remaining cash in the till drawer. This figure represents your total cash takings for the day.
4. Compare cash takings to your report: Look at your Z Report for the 'Total Cash Sales' figure. This should match the amount of cash you just counted.
5. Document the result: Use a cashing up sheet or a logbook to record the date, the expected cash amount from the report, the actual cash amount you counted, and any difference (known as a variance or discrepancy).
6. Investigate any differences: If the amounts don’t match, investigate why. Small differences can happen due to human error. Large or frequent discrepancies need immediate attention. Check for any large transactions that might have been handled incorrectly.
7. Prepare for banking: Once reconciled, prepare the cash takings for banking, leaving just the standard float in a secure place or till drawer, ready for the next day.

Top Tips for Cashing Up

• Be consistent: Perform the reconciliation at the same time every day, using the same process.
• Two-person rule: If possible, have two people present during the cash count. This adds a layer of security and accountability.
• Log everything: Keep a detailed log of every reconciliation, noting any discrepancies, no matter how small. This helps you spot patterns over time.
• Secure your cash: Always cash up in a private, secure area and ensure the day's takings are stored safely in a safe before being banked.