Cash Over / Short Procedure
Cash Over/Short is a common term used in finance and accounting to refer to the difference between the actual amount of cash received and the amount that was expected. This difference can occur due to a variety of reasons, including errors in recording cash transactions, theft, or miscounts by employees.
To properly manage Cash Over/Short, companies should have a standard operating procedure (SOP) in place. This SOP should outline the process for identifying and recording discrepancies in cash transactions, as well as the steps to be taken to investigate and resolve any issues.
In addition, proper training should be provided to employees who handle cash transactions to ensure they understand the importance of accuracy and the procedures for dealing with Cash Over/Short situations. By having a clear SOP and well-trained staff, companies can effectively manage Cash Over/Short and minimize the risks associated with it.
The purpose of this policy is to protect Hotel funds by monitoring and reporting daily overages and shortages. It is the responsibility of the FC to ensure that a daily list of all overages and shortages is circulated to the appropriate department heads.
Also, It is the responsibility of the department head to ensure there is prompt follow-up. The General Cashier will also be responsible for maintaining a Month-to-Date Overage and Shortage Report for all employees with cash-handling responsibilities
Cash Over/Short SOP Procedures:
- The General Cashier will generate a daily list of all overages and shortages and distribute it to the appropriate department heads and copy General Manager and Controller.
- The General Cashier will notify the Controller of any overages or shortages that have not been followed up by department heads within a reasonable period. The Controller must then follow up with the department head.
- Any unexplained overage or shortages that total $50.00 or more cumulatively over 30 days, consistent overages or shortages of a smaller amount, or a missing drop, will cause for a written warning to be issued by the department supervisor.
- After three written warnings, the employee will require disciplinary action including removal from cash handling or termination.
- The General Cashier will notify the Financial Controller and General Manager of any unexplained individual shortages over $200.00 and any series of overages or shortages by one employee.
- If the local laws permit, the shortages should be collected from the employee, and he will be responsible for paying back any shortages before execution.
Training Summary Questions:
Q1. What is the purpose of the Cash Over/Short SOP?
Q2. What needs to be done if there are any unexplained individual shortages over $200.00?
Q3. Who is responsible for generating a daily list of all overages and shortages?
Q4. Who should circulate the daily list of all overages and shortages?
SOP Number: Finance and Accounting SOP – 11 Department: Cash Control Date Issued: 30-Jun-2021 Time to Train: 25 Minutes