The cash count is an action that is performed from time to time in any business or entity in which economic transactions occur constantly.
Its objective is to determine whether the cash received has been properly accounted for, checking that this accounting coincides with the physical cash in the till.
Undoubtedly, it is an extremely important action that must be performed daily to ensure the profitability of the business and make sure that everything goes as it should.
In this article we show you in depth what a cash count is and how it is done through a simple to understand example.
Let’s get started!
What is a cash flow statement?
A cash count is nothing more (and nothing less) than a count of all cash transactions in a certain period of time. Although both expenses and income are taken into account, the purpose of the cash count is to check that the cash accounted for as income matches the figure that is physically in the till.
Experts recommend doing the cash count daily, or every time there is a change of shift, especially in businesses or shops that perform numerous transactions during the day.
Cash registers in physical establishments are vulnerable to theft and loss, as well as carelessness on the part of the staff. Therefore, it is advisable to check the cash register frequently in order to take the appropriate measures in case of shortages.
How to do a cash count?
Before knowing the cash count formula, it is necessary to define the variables involved in this equation.
Daily sales (DV) : Sum of the sales made during the day.
Initial cash (CEI) : Balance at the beginning of the day.
Cash at closing (CEF) : Amount of cash existing at the close of that day.
Payments by other means (VO) : Payments made by bank transfers or other enabled means.
Credit sales (CC)
Other company expenses (OG)
According to these variables the formula for the cash count would be as follows:
VD = CEF + CEI + VO – OG – D – CC
Cash count: Examples
With this formula and the definition of each of its variables, we are in a position to give a practical example and check which are the possible scenarios that you can face in a cash count.
Let’s suppose we have the following numbers
CEF: 5 000
VO: 1 000
CC: 2 000
VD: 5000 + 500 + 1000 – 10 – 30 – 2 000 = 4 460
Now, you will have to check that this final figure coincides with the amount countersigned in the Daily Sales.
If the money is less than this, there is a shortage. If it is higher, there is money left over.
Usually, this happens due to human error when we forget to write down an income or expense. Therefore, it is advisable to use a POS software that allows you to minimize this type of errors, and thus obtain accurate figures in a cash count.