I heard about a retail business where the store manager was sick of dealing with the register not balancing and so they introduced a cash tin under the counter into which they added cash when they were over and from which they took cash when they were under.
The owner was furious when they discovered this cover-up. And, rightly so.
Rather than get to the root cause of an over or under at end of shift, the manager was lazy and hid the problem. No wonder the business has not been performing well.
Discipline is key in retail as in the use of any retail management software. Hiding problems is not good for business. A manager doing this secretly is not serving the business or its owners well.
My advice on balancing the register to to do so in a way that is accurate and in service of the business.
I have seen systems that show up front what the expected cash is. This is a mistake as people can pocket any cash that is over.
There are many reasons a register can balance over or under. The only way to address any systemic causes of this is to see the problem, track back to the cause each time and improve the management of the business.
Having a tin of cash under the counter to enable you to always balance is a fool’s game. It looks and feels like fraud. It’s as bad as retailers who do a no sale on the register to take out cash for personal spending. That behaviour in front of employees shows them what’s acceptable.
Speaking about balancing systems brings to the fore Lotteries and the general sales register and their differences. HUGE with some . Before I get jumped upon with the new Xchange iT program of reconcilliation let me say it was never necessary and it won’t solve some balancing problems
the problem is the muktiple sales of lotto with product at very busy times and in very busy outlets.
Also the reconcilliation between the two at the end of the day is almost impossible for apart from human “ring up error” which is alarming there is lotto purchases tha do not fo through the register.
Maybe the new connection will include this -I don’t thinks so as it’s a coal face transaction.
Yes balancing is an awareness problem and can’t be manufactured and I would suggest the same with Lottery terminal transactions with till additional sales need more attention.
The figures supplied to accountants rarely reconcile or balance in the Profit and loss accounts
with the actual result.
I have assumed that the Daily cash Balance report from Lotto gives me accurate figures for total Sales and Payouts at the end of each day. This Data I use to Update my POS reports for each day when I enter the data into Myob (usually the following morning with occasionally up to a 5 day delay). Since this new system has started the POS system figures are now far more accurate and 95% of the time within plus or minus 10 dollars each day the most accurate I have ever seen in my POS. I also give my Accountant a full settlement Printout each Quarter as a part of my BAS process which I leave to him to update my accounts.
The accuracy now far greater and better than it was prior to the changes.
It sure is Peter R however there still are the sales to add on I assume or are these included by sales I mean goods that The Lott sell Wallets Christmas Bon Bons etc also does the new system transfer the charges or in these cases does the usual Settlement Reoprt still need to be done.
Sales and the Commissions Reports are two different things and whilst I appreciate te sales were always out under the old system and now are co ordinated has tere been any transfer on a daily basis of commissions and Charges?
thsi would be great as it shows a nett daily working capital for those that want to know without still having to do the settlement Report.
All these other add ons from the lott are done and set up as ready sale packs with their own printed lott docket so if they are done properly using the lotts way they are captured by the system and charged when sold not when set up (scratchy trees, bon bons, socks et all). Mind you they are finicky and a pain in the arse to set up properly. Wallets from experience can I think but will check on, can be done through the Lotts terminal.
The Lott is determined all sales be recorded at the time of sale. As on the whole each sale is seen as a gambling transaction (excepting wallets).
Thanks for the explanation. The system is better than before however i will sitck to the commissions only recording and treat the “sales and money transfer to the Lott, not as purchases as some accccountants do in the P&L, but as a xash transfer transaction, placed in a suspense account or similar account in the General Ledger along with Phone cards and other non product services. This also complies with the ATO requirements and it helps with the cash flow of who owns what.
It’s surprising that many newsagents are not using this new system and really don’t know how to balance their lotto at all.
Apologies to Mark this is now way off Topic. At the end of the day you are right about commissions etc. However I have to watch the whole to balance and plan banking’s cash flow usage etc. That is why I prefer to use it as Sales rather than commissions etc in my thinking as I think and plan for whole. I am not an account though who prepares my BAS, 12 monthly accounts and Tax returns each year.
Thanks again Peter and yes it is partly off topic howvere the post is about balancing and Marks advice re doing it correctly.
My concerns have been answered mainly by yourself. Thanks , i agree that the sales need to balance with the input and the pay out of cash which then configeration to the correct net commissions rec’d as this is the end position. It all has to do with as Mark points out correct procedure in balancing which is the systematic approach.
It’s a good discussion as it is all about accurate business data, which is critical.
Yep a very important discussion. Since taking over our store 3 odd years ago we have religiously monitored our daily cash reconciliations. We had one employee who struggled with this basic end of day procedure. They are no longer with us nor are our end of day cash variances. We also monitor our daily voided sales for the same reason.
Graeme I agree too many accountants lump lotteries sales with non lotteries takings. This is useless for meaningful financial reports for both owners and prospective buyers. I agree daily lotteries takings and payouts should be posted to a Lotteries Payable liability account , commissions and charges deducted and the balance reconciled to sweeps made by The Lott.Peter this is easy to setup with your MYOB integration.
Thanks Steve, for the professional input, i do respect it.
My frustraion is not that I have to do this reconcilliation which I can by setting up an excel format which I have done,the frustration is explaining to people (including Bankers not so much these days) that the ATO Profit and Loss can be so wrong when the ATO years ago seperated Sales with product (for it has purchases) from those that are services. This area as you well know with your Accounting practice should be basic. People are getting carried away with presenting millions of dollars in sales and a Gross Profit of $300k.thinking its impressive when actually they turn off the business after good advice and therefore don’t trust the agent.
Mark is correct. his software does have the facility to balance the cash cash out however none of them can control the external transactions we discussed here. My advice to newsagents is don’t have yourself on it the Gross profit that pays the bills or expenses and the sales that pay the supplier from the cost of Goods Sold NOT the purchasers. for surpluss buying increases stock not necessarily Sales.Thanks Mark for the Post and for the comments for we enter different times and Banks are acting very differently than before.
Steve I see what you say and yes it would be within the capabilities of MYOB However I have to ensure there is sufficient cash in the Bank A/C for Lotto and others to sweep. That is why I prefer to think in the whole. I then watch the Accountant convert to commissions etc for tax and account preparation purposes. I still do all the accounting data entry though for sales/revenue and outgoings. I do my own bank reconciliations and than hand it to the accountant.
The two matter however as long as we keep Sales related to purchases for Gross Profit. This return is the measure for the space we allocate to the product producing such. i.e. Mark has stated that G.P. should or rather could be 48-55% of sales this is imperative and goes with balancing. it’s imperative because we waste so much time in not addressing the issue. Good software, such as Tower and some others ,after balancing the cash daily provides the date for this to be set up. M.Y.O.B., excel spreadsheets Xero whatever This is what I believe Steve is referring to and what I mean by checking the amount of nett profit from lotteries daily weekly or at least Monthly for it helps that cash flow, which is critical today.
we need sometimes to pull on the accummulated profit as cash flows alone have too much high and low and do not sync with the trading pattern.
Anyway it’s good to discuss these neds and ways of doing if it can helps some that are in trouble.