Poor financial management is one of the main reasons restaurants, bars and nightclubs go under in their first few years of operation. Not properly tracking expenses, revenue and profit can drive the business to failure.
That's why it's essential to know and carry out every process the right way. One of them is the cash register closeout. Part of the routine at any establishment, it demands a lot of care to avoid mistakes and protect the financial health of the business.
If you want to know how to do the cash register closeout, check out our guide below!
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What is a cash register closeout?
Every establishment has a daily routine of opening and closing the register. It's there to record and keep control of the financial transactions carried out.
At the start of the shift, the operator opens the register by logging the amount available. There's usually a set amount in coins and bills put aside to make giving change easier, known as the cash float.
Throughout the shift, as sales and payments happen, every inflow and outflow of cash or other payment methods is recorded.
Finally, to wrap up the day's financial operations, the cash register closeout is done. This task consists of tallying every inflow and outflow and checking whether the totals match.
So the main objectives of the cash register closeout are:
- Ensure every transaction – cash, cards and PIX – is recorded accurately.
- Identify any discrepancy between the actual amounts and the amounts recorded in the POS system.
- Calculate the day's net earnings.
That way, you not only ensure your financial information is accurate, but also run more precise performance analyses and gain insights to improve the business's results.
Why does it matter for the financial health of the business?
Although in theory the cash register closeout seems like a simple task, in practice it can cause plenty of headaches.
That's because, without a well-defined process and properly trained cashiers, shortages or discrepancies in the register can happen.
In other words: at the end of the day, the numbers don't match. Most commonly some amount is missing, but there can also be money left over.
So if the closeout isn't done the right way, these problems can pile up to the point where management loses visibility of the inflows and outflows, loses control of the cash flow and can't tell what the financial health of the business really looks like.
In short, the cash register closeout is important for:
- Cash Flow Control
- Detecting errors and fraud
- Meeting tax obligations
- Evaluating financial performance
- Backing strategic decision-making
- Transparency and accountability
So if you want to learn how to do the cash register closeout properly, check out the step-by-step guide below!
Leia também: Accounting for restaurants: understand how it works
How to do the cash register closeout: step by step
Having a well-defined process for the cash register closeout is essential, both to avoid mistakes and to make training your staff easier. Check out the step-by-step below!
1. Assign someone in charge
Pick one person to be in charge of the cash register closeout. Since this task demands close attention to the numbers and knowledge of the system, it's usually done by a more experienced, trusted employee.
2. Define the processes
The cash register closeout can be done through a management system, an Excel spreadsheet or even a notebook. The best option is to rely on a system, since the records are automated and it makes the closeout far more efficient.
Learn more: Cash register software: what it is and what its benefits are
It's also important to determine which actions should be taken when there are product voids, a change in the payment method chosen by the customer, cash adds and cash drops, for example.
It's these actions that, if they aren't recorded, can lead to a shortage in the register and create inconsistencies that are hard to track down.
3. Record the register opening
At the start of the shift, recording the opening balance is a must. In other words: the cash available in the register. It will serve as the comparison baseline for the closeout.
4. Record the inflows
Throughout the day, every cash inflow must be recorded in the system. That means every amount paid by customers in cash, credit and debit card, PIX, meal vouchers and so on.
Besides sales, any other cash coming into the register should be noted too, such as adding money to make giving change easier, for example.
5. Record the outflows
Every outflow that happens during the day must also be recorded, such as:
- Cash drops (when part of the money taken in is removed to be stored somewhere safer).
- Payments made to suppliers, freelance waiters and delivery riders (although this isn't a recommended practice, it may be necessary).
6. Prepare the closeout
Gather all the documents needed to tally the total inflows and outflows, such as invoices, receipts and payment slips.
Sort the documents by each payment method used: cash, credit and debit cards across the different card brands, PIX, and others. That makes closing the register easier.
7. Check the amounts
Check that every inflow and outflow matches the amounts recorded during the day. If there's any discrepancy, try to find the cause and fix it.
A good tip is to run this step every time the cashiers change shifts, since fixing possible errors is more efficient that way.
8. Complete the cash register closeout
To wrap up, after checking every inflow and outflow and resolving any discrepancies, complete the cash register closeout.
To do that, add up all the inflows and subtract the total outflows.
Register = (total inflows + opening balance) – total outflows
Why doesn't the closeout balance?
The cash register closeout should come out even, in other words: not a cent more or less than what was recorded. But mistakes are very common. That's why it's so important to pay attention to the processes and make the proper records.
Some of the main reasons behind errors in the cash register closeout are:
- Wrong change: when the operator miscalculates and gives back too much or too little change.
- Incorrect entries: when the customer changes their mind about the payment method and the operator makes the switch but doesn't update the record.
- Not recording product voids: when the customer returns a product but the operator doesn't void it in the system.
- Not recording cash drops and cash adds: when the operator doesn't note the money taken out of or added to the register.
- Theft and fraud: it can also happen that the operator or another employee siphons money from the register.
As we mentioned earlier, the solution to these problems lies in clearly defining the processes and the actions to be taken whenever one of these situations comes up.
For example: whenever there's a cash drop, the operator must record it immediately, no matter the amount.
On top of that, you need to invest in training your staff so they're clear on how to act and thorough with the records. That way, there's less chance of mistakes happening.
Simplify the cash register closeout with technology
Lastly, a system PDV how EPOC simplifies cash closing and several other processes in your restaurant, bar or nightclub.
In addition to being a Checkout system that is complete and flexible enough to adapt to every type of operation, EPOC automates your records and makes your business's financial management routines more efficient.
Discover every available feature and see how they work in practice. Schedule a free demonstration now and see how we can help!
Frequently Asked Questions
What is a cash register closeout?
How does the cash closing work?
What is the main purpose of the cash closing?
How are the cash opening and closing done?
How to do the cash closing step by step?
1. Choose who is in charge
2. Define your processes
3. Record the register opening
4. Record every inflow
5. Record every outflow
6. Prepare the documentation
7. Check the amounts and fix errors
8. Calculate the final balance
What can you do to avoid cash shortfalls?
What is the math formula used for the cash closing?
Register = (total inflows + opening balance) – total outflows
