The first objective of any Point of Sale system or Cash Register, is to assist in maintaining Cash Control at the Point of Sale.

While POS systems offer many benefits to retailers, including inventory control, reordering, customer monitoring, profit management and expense control, Cash Control comes first, and unless this is working properly, other features of the system are unlikely to be effective.

The basis of cash control in a retail store are the Z-Reads which are performed at the end of each shift and day. These provide a summary of the operations that have been performed on the POS terminal, along with a listing of the monies and documents that should be present in the cash drawer.

Most importantly, the Z-Read provides information that is vital in detecting, analysing and correcting errors that may have occurred, as well as indications of suspicious activities that may warrant further investigation by management.

Although Z-Reads have been standard features of Cash Registers and POS systems for decades, we are consistently amazed at how little understood these vital reports are, by many retailers that have years of experience. Perhaps this is because the information on Z-Reads appears terse and not particularly user-friendly, but proper understanding of the Z-Reads, and particularly the cross checks they contain, is essential in maintaining proper cash control in a retail store.

There are three main components or sections in a Z-Read or X-Read. Each of these sections are divided into categories and a subtotal is shown at the bottom of that section. These sections are as follows:-

• Department Sales
  Every product in a retail store belongs to a Department.

  Departments are product categories for which management wishes to track sales and/or profits. For example, a general store may include the following departments useful:-

  • Cold Drinks
  • Warm Drinks
  • Magazines
  • Cleaners and Soaps
  • Tinned Foods
  • Tea and Coffee Supplies
  • Fast Food
  Management is interested in tracking sales in each of these departments or product groupings. Notice that Cold Drinks which require refrigeration and are priced higher, are grouped differently to warm drinks which have less refrigeration cost and lower price.

  In the old days of Cash Registers, when selling a Cold Drink, the operator would key the price, and then the appropriate department button.

  With modern POS systems, the operator would scan the item with a barcode reader, and the computer would automatically know which department the item belonged to from the product masterfile.

  Either way, all sales belong to one department or another, and at the bottom of the Department Sales section of the Z-Read a total is shown of the total sales that have been made in the period.

• Adjustments
  Different systems use different names for "adjustments", but the key element here is that adjustments are any financial movement in or out that affects the balance in the cash drawer, that is not a Sale.

  Examples of Adjustments that increase the balance of the cash drawer include:-

  • Float paid into the till so that change can be given to customers
  • Customers that pay money on an account balance owed to the store
  • Surcharge for out of hours or holiday trading
  • or anything else that is paid into the cash drawer that is not a sale.
  Examples of Adjustments that decrease the balance on the cash drawer include:-
  • monies paid out to suppliers for goods purchased by the store
  • When a customer pays by credit/debit card and takes out money in cash
  • monies paid out for the boss to go to lunch
  • monies paid out for staff wages
  • staff discounts
  • safe drops where excess funds are taken out of the till and placed in a safe to reduce losses from robbery
  • or anything else that is paid out of the cash drawer.

• Finalisations
  Finalisations are the ways in which sales are completed, finalised or paid for. Obvious examples of finalisations include:-
  • Cash
  • Cheques
  • Credit Card Payments
  however there are some types of finalisations which are less "obvious". These include:-
  • Charge sales to in store accounts. In this case, the charge to the account finalises a sale, but in accounting terms, a journal entry is then made to a "trade debtors" asset account. With Cash and bankable finalisations there is also an entry made the asset account "Cash on Hand".
  • Gift Certificates/Coupons. These could also be handled as an adjustment depending on store policy, but more usually they will be a type of finalisation.
  • Staff Giveaways. If staff are permitted to take stock such as drinks for their own use on the job, this needs to be recorded, otherwise stock will go out of balance. Treating these giveaways as sales that are finalised as "Staff" keeps stock figures accurate and allows you to track the value if what is given away.
  • Breakage. Breakage reduces the quantity and value of stock on hand, and is one form of shrinkage. If this is tracked as a "sale", stock can be kept more accurate, and management is alerted to problems earlier than at a 6 monthly stocktake.
  • Comp. This is where management gives something to a customer "on the house". Once again, tracking this is necessary to maintain stock control, and prevent fraud.

The Z-Read shows a listing of the items in each of these categories, along with a subtotal of each of the categories.

The key principle on a Z-Read, is the formula:-

Total Sales + Total Adjustments = Total Finalisations.

The primary reason for installing a Point of Sale system is so that transactions can be measured accurately so as to enable management to decide what actions to take in certain areas, if any.

Frequently, when implementing a POS systems, management will indicate that they are not concerned about something such as:-

• One or two Coke's that staff take out of the refrigerator for personal consumption.
• The $50.00 that the boss takes out of the till on his way to lunch
• The money paid out to the vendor that delivers milk
• or whatever else they think is unimportant.

Certainly it is certainly the right of management to determine what factors they consider important.

The function of the Point of Sale system, is to track what is actually happening, so that management can make an informed decision about what they want to monitor and control. Frequently, when management realises how much the various items actually total, they change their minds.

The first step in balancing the till is to physically count the till. This should not be done by the staff member that has processed the transactions, because of the risk they would pocket any overage.

Once the till has been counted, it should be compared to what is shown on the Z-Read. Discrepancies will occur from time to time, as no operator is perfect. The key issue is to identify when errors occur and why. The decision about what action to take is a separate issue. The key is to accurately determine what happened.

Where there is a difference between the physical count and the amount show on the Z-Read, the reason will always be one or a combination of the following:-

1. Not all the transactions were processed through the POS.
2. The cash has been miss-counted.
3. Incorrect Change was physically transacted. For example, the customer received a $20.00 note when they should have been given a $10.00 note.
4. The float figure (money in drawer at the beginning to enable change to be given) was not the actual float used.
5. The sale was finalised to the wrong finalisation method. For example, an EFT finalisation is processed as Cash. In that case there would be an overage on the EFT reading equal to an underage in Cash.
6. An EFT Cash Out was entered on a standalone EFT Terminal as a sale.
7. If sales figures are higher than reality, it is possible that sales already existed in the system, and it was not zeroed correctly at the beginning.

One thing that complicates matters, is that during an entire shift, more than one error may have occurred. In cases where proper cash control disciplines have not been in place, the chances of staff miss-keying and skipping transactions are far higher. The following troubleshooting tips can help to resolve cash balancing issues:-

• Try balancing the till for smaller periods rather than the entire day. SELLmatix supports multiple shifts, so at various intervals to a Shift Z-Read and count the till.
• Ensure that a printed receipt is kept for every transaction including adjustments, comp sales, and staff usage.
• keep a spreadsheet with two separate columns for "Z-Read" figures and "Actual" and make adjustments as needed.
• work through the transaction audit trail to identify where errors have occurred.

Finally, remember that if there is an error in the till count, there will be a corresponding error somewhere else in your sales or adjustment figures. If you are going to have accurate information on which you can make informed management decisions, then as a first step, you must balance the till.

There is an old saying in retail that, among your staff:-

• 10% will never steal from you
• 10% will always steal from you, and
• 80% might steal from you if you have the opportunity.

By reducing the opportunities for people to steal, you increase the chances of catching those that do the wrong thing, and discourage others from trying. Key steps to follow which will help include:-

1. Never let the POS operator print X-Reads or Z-Reads. Honest staff will have till overages just as often as they have underages. If they can get a printout of what should be in the till, the chances are that may try to skim any overage.
2. Never let the POS operator count the till.
3. The person who does count the till should count the till blind. That is, they should not know what should be in the till while they are performing the count.
4. Always use a cash drawer that is connected to and controlled by the POS. Manually controlled cash drawers invite the operator to process transactions without the POS, and pocket the money. Cash drawers connected to the pos are monitored in the statistics which will indicate if this is happening.
5. Monitor the statistics on the Z-Reads to track for "No Sale" actions to activate the cash drawer, Voids, and Price Changes.
6. Obtain signatures on all adjustment transactions, staff sales from the staff member, and management on comp. sales, and have these counted as part of the cash drawer counting process. Failure to monitor these invites misuse.
7. Count stock in various departments at random, so that staff do not know when something will be checked.

The key to informed management decisions is knowing the facts. Even if there some items which your POS system tracks which you currently feel are unimportant, you should continue to track them because they can be leading indicators should a problem develop in future. Just because you don't have a problem in a particular area now, does not mean that such a problem will not develop in future.

Proper disciplines and controls cost nothing and safeguard your business.

Never expect what you don't inspect.

If you haven't already done so, why not activate SELLmatix now and start enjoying the benefits of the system now. With SELLmatix, you don't have to pay for everything up front. You can implement the system in stages adding parts as you go from the savings you make. As little as $30 gets you started. No risk. No long term commitment. Activate Now!