What Is a Cash Drawer Shortage? How to Find and Prevent It

1What Is a Cash Drawer Shortage?

A cash drawer shortage is when the cash you count in the drawer comes to less than the amount that should be there. If you count more, the drawer is over; either way, it's a cash difference, often called cash over and short.

A shortage shows up when the till is counted at the end of the day or at a shift handover. The sooner you notice it, the easier the cause is to find: a change mistake you remember the same day is forgotten by next week.

2How Do You Calculate a Cash Shortage?

First work out the cash that should be in the drawer, then subtract the cash you counted:

• Expected cash. Opening cash + cash sales and cash collections + cash put into the drawer − cash taken out (expenses, cash refunds, money taken to the bank).
• Counted cash. The total of the notes and coins in the drawer, counted denomination by denomination.
• Cash shortage. Expected cash − counted cash. If the result is above zero the drawer is short; below zero, it's over.

For example: you started the day with ₺500 in opening cash, made ₺1,379 in cash sales and sold a ₺750 gift card for cash. ₺2,629 should be in the drawer. If you count ₺2,619, the shortage is ₺10. Card and on-account sales never enter the drawer, so they stay out of this calculation.

3What Causes a Cash Shortage?

• Change mistakes. Giving a customer too much change; the most common cause.
• On-account sales not recorded. If goods were handed over and the balance wasn't recorded, no money came in for them either.
• Wrong payment type. A card payment recorded as cash leaves the drawer short.
• Cash out not recorded. An expense paid from the till, money given to a supplier or cash taken to the bank that was never entered.
• Refunds not recorded. Cash handed back to a customer without the refund being entered.
• Counting mistakes. A denomination skipped or counted twice.
• Unrecorded sales or cash taken without permission. Less common; when a shortage keeps recurring at the same till, it calls for a closer look at the records.

4How Do You Find a Cash Shortage?

When the drawer comes up short, work through these steps in order; most shortages are found in the first few:

• Count again. Many shortages are counting mistakes.
• Compare the card total. Check the card total in your records against your card terminal's end-of-day report. If a card payment was recorded as cash, the difference shows up there.
• Check on-account sales and refunds. Is there an on-account sale nobody recorded, or a refund that was never entered?
• Check cash in and out. Was every expense paid from the till and every amount taken to the bank recorded?
• Narrow down the time. An unannounced count during the day and the count at shift handover show between which hours the shortage appeared.
• Separate the tills. When each person works their own shift, you know which till the shortage came from. When several people share one drawer, finding the source gets harder.

Look at each closing's own difference, not just the day's total. A shortage in one till can cancel out an overage in another: the total shows zero, yet both tills have a mistake to find.

5What Do You Do When You Find a Shortage?

Record the shortage and its known cause the same day. The people who took part in the count write a short cash shortage report, with:

• Date and time, the till and whose shift it was
• Expected cash, counted cash and the difference
• The known cause, or a note that no cause was found
• The names and signatures of everyone who took part in the count

Record small shortages with no known cause too. Only the records show on which days and at which till the same shortage keeps coming back.

6How Do You Prevent Cash Shortages?

• Everyone on their own till. Each person sells with their own sign-in and their own shift, so a shortage shows up in a till whose owner is known.
• Count together at handover. When the till passes from one person to the next, both count it; any difference is talked through on the spot.
• Limit permissions. Only the people who need them get to give refunds and discounts, put money into or take money out of the drawer and close someone else's shift.
• Record every cash out with a description. Every amount that leaves the drawer is recorded with what it was for.
• Keep little cash in the drawer. Take accumulated cash out during the day and record it as cash out; the less cash in the drawer, the smaller any shortage can be.
• Separate oversight from selling. When the person who reviews the records isn't also selling, checking them gets easier.

7Tracking Cash Shortages in PratikKasa

In PratikKasa, the till is tracked with per-person shifts. Each person signs in with their own username and password and returns to the till with their 4-digit PIN; their sales and collections are recorded on their own shift. When a shift closes, the cash is counted and the app shows the expected cash and the difference. If there is a difference, a reason is selected: Change Error, On-Account Sale Not Entered or Other.

On the Shifts screen, an open shift's card shows the cash that should be in the drawer right now; for an unannounced count during the day, you compare the drawer against that amount. Closed shifts are listed person by person: time, sales, expected, counted, difference and reason. You can also look at yesterday's closings or those of any day you pick.

On the Roles and Permissions screen, you decide role by role who can give refunds and discounts, who can put money into or take money out of the drawer, who can close someone else's shift and who can see shift differences. If you set the way of working to «Managers monitor, cashiers run sales», people in the Admin role don't sell; they follow the business from the Today and Reports screens.

The drawings in this post are based on the screens of PratikKasa 2.1.0.