Cash Handling Do’s and Don’ts

Keep an eye on your MONEY!

I often advise restaurant owners and especially those starting their restaurant for the first time, to always count and control their own cash.

There are simply too many employees in restaurants and loose procedures that lead to loss of cash or theft.

PETTY CASH:

Every restaurant has a petty cash account and a safe with a certain amount of petty cash on hand daily, broken down into all denominations. Petty Cash is your “working cash” used as change in your cash drawers, in your ATM machine for customer withdrawals and also in your coin changer if you have arcade games in your restaurant. The amount in your safe is constantly shifting based on daily events… For example, you have a busy Saturday night concert and the bar will be slammed so they need a larger bank. The bar manager trades you hundreds of dollars in 20’s for 1’s, 5’s and 10’s. You put $500 worth of quarters into your change machine and it will be a few days until those quarters are redeemed for dollars. It can be confusing to keep all this money straight so its easy to become “short” due to human error.. Bottom line is: You need to routinely count your petty cash on-site and compare against your Quickbooks Petty Cash balance. I used to do this every week.

Sometimes the majority of your customers will pay with credit cards and your restaurant will take in little cash. On these nights, when your servers “Cash Out”, you may find that you owe them money for the tips they earned that will be deposited to your bank account automatically. It will be a day or two until your credit card batch deposit makes it into your bank account, but you will be re-paid these tips that you fronted the servers with your petty cash. Make sure you replenish petty cash to your safe to replace the tips you paid out.

BAR RINGS:

Sometimes bartenders like to pour one or more drinks for a regular customer without ringing in each sale on the spot. Most of the time they keep a tally in their head and then cash out each customer at the end. The customer may feel special and trusted, but over time the house is likely to lose money and your beverage costs will inevitably rise. No matter how well intentioned, as the bartender gets busier, the less likely to remember to ring every single drink especially if this practice is followed with several customers simultaneously. If you want to run a tight bar, bartenders should open a new ticket in your POS system immediately for each customer and then run a tab, punching in each drink as it is ordered.

WORD TO THE WISE: Unfortunately, the dark side is there are many unscrupulous bartenders out there and the bar is the easiest place to steal in your establishment. Its easy to charge the customer for all the drinks later, ringing in fewer drinks than poured and pocketing the difference throughout the shift. Day in and out, month after month, bartender after bartender and you can see the potential cash you can lose. I always made a point to spend time sitting and observing at my bar and spot checking tabs and I highly recommend this practice. If they know you are watching and know the tricks, they’ll think twice about taking advantage of the situation.

DAILY DEPOSITS:

At the end of the day, you as owner or GM should cash out your servers, hosts and bar and handle all cash yourself. Over time, you may trust a head server, but If you allow others to handle cash, you should have a check and balance system in place. A simple system will compare and verify bank deposits from your bank statement to your daily sales reports (cash owed). Any small variances are usually for Paid Outs during the shift (which should have their own total on your cash up sheet, with sales receipts attached.

When you cash out servers, hosts and the bar, they will each have a combination of cash and credit card payments. Since the credit card totals are accumulated each day and then sent in a batch to your bank, the bottom line of each cash out slip run from your POS system will show the amount of “Cash” owed the house. After everyone has cashed out, it is good practice to once again “Total” all the cash out slips together. Some will have positive cash balances and some will be negative, meaning you owed the server money for their credit card tips which exceeds the cash they owe you. Once all slips are totaled, you then verify that you have that exact amount of cash, before filling out a bank deposit slip, putting the money and slip in a zippered bank bag and storing in your safe until you go to the bank. 
NOTE: You should alter the days you take your deposits to the bank randomly in case someone is watching your patterns for possible theft.

COMPS & VOIDS:

Your POS system has a Comp & Void function with management controls and it is good practice to be stringent about passing this authority on to other staff, even head wait staff.

Same risk as at the bar, when a “cash paying” customer is ready to pay the bill, dishonest staff can cash out the customer and then go back into the system to “Open the closed check”, Comp or Void off menu items and then pocket that amount of cash. Literally hundreds of dollars can be lost in no time. To protect against theft, insist that each and every product Comped or Voided have a POS slip printed with the reason for the comp or void clearly written on the slip and be turned in at end of shift. Comp and void totals appear on every server, host or bartender’s “Cash Out” slip at the end of a shift, so make sure that the total of all comp and void slips attached matches the total on each cash out slip. . I then recommend that you routinely spot check to verify that the reasons are legitimate and that totals match. Again, if they know you are watching and checking…

IF CASH DOESN’T MATCH THE SALES REPORT:

After totaling all cash out slips, counting all cash and accounting for paid out slips, sometimes there is still a sizable sizable shortage. Often the missing amount is explained by an owner or manager who ordered food & drink but forgot to Comp or Void their check from the POS system. In this case, the system recognizes a cash amount owed for these products but there is no cash for the order. To find the missing cash, your POS system has a “Cash Owed” function that reflects all closed and cashed out staff, as well as those still “Open” in the system.

NOTE: If all else fails, double check underneath all cash drawers for any loose bills that may have been caught behind the drawer.

COMPARE CASH ON HAND WITH PRIOR PERIODS:

To watch profits grow, make it a regular process to compare cash in the bank today with the same day from a prior period, a month, quarter, year, etc.. This is done simply by looking at the daily balance of your bank account statement from the prior period and comparing the cash balance from the same day in the current period. Don’t forget to add an extra day of sales to allow for the difference in calendar dates from one year to the next if you compare one year to another. Its comforting to see a larger growing amount of current cash. If the amount is significantly less than the same day last period and you have made no large unusual purchases, you have a new issue to investigate and solve.