How to Have Excellent Cash Management in Retail Stores

We know that running your shop can be a whirlwind of fun and creativity, but let’s chat about something that can cause some serious headaches if not handled right—your physical cash. Yes, that good old paper money still plays a big role in your business. Managing it properly is key to keeping your finances in check and your stress levels low. Let’s dive into why it’s important and how to master it.

Why Does it Matter?

First things first, reconciling your cash to your POS system daily is non-negotiable. Think of it like brushing your teeth—you wouldn’t skip it, right? Reconciling daily ensures that what your POS system says you have matches the actual cash in your drawer. It helps catch discrepancies early, whether it’s a mistake or something more sinister like theft. This routine also gives you a clear picture of your daily sales and cash flow, which is crucial for making informed business decisions and maintaining a healthy cash reserve.

What to AVOID in Your Retail Cash Management

Next, let’s address a common pitfall—using your cash for expenses. It’s tempting to dip into the till for those little purchases here and there, but this can quickly spiral out of control. Paying for expenses directly from your cash drawer makes it nearly impossible to keep accurate records, which leads to confusion and potential shortfalls. Instead, make it a habit to deposit your cash regularly into your business bank account and pay expenses from there. This way, you maintain a clear trail of your financial transactions, making bookkeeping a breeze and tax season less stressful.

My Recommended Process for Cash Management in Retail Stores

So, how should you track your cash? Here’s a simple, effective process:

Identify Your Daily Starting Cash: Determine the amount of cash & change you need in your register at the start of each day so that you can accurately give out change throughout the course of your operations. This is going to be your starting balance at the beginning of every day, and the amount that you will KEEP in your register after the close of each day. 

Count Your Cash Daily: At the end of each day, count the cash in your drawer. Separate your starting cash (see above) from the day’s sales. Make sure this is done in a quiet, secure area to minimize errors and distractions. Put your starting balance BACK into the register, and keep the rest out. The amount you withdraw SHOULD equal the amount of your cash sales for the day.

Reconcile with Your POS: Compare the cash count with your POS report. Note any discrepancies and investigate if you can This might mean checking for simple mistakes, like inaccurate change given, or more complex issues like employee theft.

Track It: Keep a daily cash log like this one here, recording the date, cash counted, POS total, and any differences. This can be a simple spreadsheet or a dedicated cash log book. Consistency is key here; make sure every day is logged without fail.

Deposit Regularly: Schedule regular bank deposits—daily or weekly. This minimizes the risk of loss or theft and keeps your cash flow smooth. If you’re making deposits less frequently, ensure you have a safe place to store cash.

Review Weekly: At the end of the week, review your cash logs to spot any recurring issues or patterns. This review can help you identify trends, such as certain days with frequent discrepancies, which might need closer scrutiny.

Now, let’s talk about some tips to make this process smoother:

Train Your Staff: Ensure that your employees are well-trained in cash handling procedures. They should know how to count cash, use the POS system, and follow security protocols. Regular training can prevent many common mistakes.

Maintain Security: Always prioritize security when handling cash. Count money in a secure, private area away from customers. Use a safe for storing larger amounts of cash, and never leave money unattended.

By sticking to these steps, you’ll keep your cash flow under control and your anxiety at bay. Remember, managing your cash isn’t just about numbers—it’s about maintaining the health and happiness of your business. It might seem like a chore, but these daily habits can save you a lot of headaches in the long run. You’ve got this! Keep up the great work, and your boutique will thrive both creatively and financially.

If you need some additional guidance getting your bookkeeping & financial tracking systems in place, then I’d love to invite you to check out Shopify Bookkeeping Made Simple. In this course, I walk you through exactly what (and when) you should be doing all the bookkeeping related tasks in your business to make sure tax time is a breeze!

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