By Duncan Colvin, Venners Consultant
Suffering Cash Losses in Your Bar?
Poor margins in bars are generally the result of one of two things: the loss of stock, or the loss of cash to the business.
In previous blogs we’ve explained the need for and the essence of good stock control in order to maintain your margins. But, the loss of cash can kill a business. A concern that is especially serious around this time of the year, when businesses attempt to sell through the stock they’ve built up over the festive period – better to have it in the bank during February than on the shelves.
The Dangers of Cash
The loss of cash from the float is galling enough, but to loose cash from the tills after a sale seems to double the loss: losing both the stock and the profit on its sale. No wonder the trade headlines are filling up with stories of bars going cashless! According to UK Finance, by 2026 cash will be used for just 21% of transactions.
Of course there are risks associated with going cashless. Any member of staff who is determined enough will find a way to divert money to their accounts. The use of integrated card machines is paramount to control: only allowing tilled sales to be processed. These, however, are often wired or fixed and this doesn’t suit all businesses. The ease of access to portable card processing machines that top up a PayPal or bank account are being used all too frequently by rogue staff.
While we still have cash in our businesses we must control its movement and make these controls visible to staff. Our industry is such that the cash sales are often completed by a relatively new, transient staff member with little loyalty to their employer.
What are the 3 biggest cash handling risks?
1. Exchanging money
How you handle change can be crucial and is often a weakness in larger sites where the main change safe may be some distance from the till. Be aware of the process to exchange notes for coins during a shift. Coins and notes should always be exchanged at the till. The rogue staff member is looking for an opportunity to lift the under-rung monies from the till and ‘popping to the manager’s office’ with a change order is the ideal opportunity.
2. Cashing up tills
How the tills are cashed up at the end of a session is also a huge risk. Are the tills usually cashed up by the same member of staff? It is of course convenient to gratefully accept the offer of a member of staff who is happy to work 5 late shifts a week, but be suspicious of their motives if left alone to cash up.
3. Lack of documentation and controls
Good cash controls should be perceived by the staff to be strong. Paperwork should be required at every stage, requiring 2 signatures, with no lone-working. Allocating a till to a single member of staff or a team is a good idea, but did they confirm the float at the beginning of the shift? It is difficult to challenge staff if you can’t prove that the opening float was accurate.
Creating a cash control culture
Cash control in any business is a reflection of the culture developed by the owner or manager. It has to be led by example and if it is important then cash control cannot be loosened at busy times. Cash control systems should take busy times into accounts.
Tips for reducing cash handling risks
1. Tighten up cash movements
Try to prevent cash movements during service. You can do this by increasing the float to prevent change drops being required, or by securing a change tin at the bar which can then be included in the end of session cash up.
2. Implement validation procedure
Try to prevent lone working and consider who cashes up and how often. Witness signing is important and should be just that; witness to the cash, not a cursory ‘sign here mate’ at the end of a long day. Ensure supervisors have time to cash up accurately and that it is part of the shift rather than an extra task at the end.
3. Make till variances transparent
Finally ensure that records are maintained and that the staff are all involved. Keep a log of till variances. Many tills will provide a report on corrections made and shortages that often get ignored. Consider posting these weekly on a staff board. It increases perceptions of control and can be used to set targets.
It is important to spend time assessing your cash control, but the risks are often associated with personalities and inherited practices. Venners Consulting offers a suite of Financial consulting audits that include aspects of Revenue Protection, Cash Handling, Banking Compliance & Financial Fraud Prevention.
A Venners financial controls audit will highlight practices and procedures that are weak and will assist in the implementation of strong controls, proven practices and rigorous procedures.
The move to cashless feels inevitable but it may also be the case that our industry is the last to hold out. Cash control shouldn’t be stressful; with the correct practices and controls in place you can relax and concentrate on the other million things that need addressing this week.