A cash float in retail is the amount of cash kept in the cash register at the start of the working day. It aids overall efficient and smooth cash flow including the easy provision of change to customers.

Calculating the current cash float during daily operations is important as it helps in financial projections and accurately reveals upcoming liabilities.

This blog will cover a general overview of cash floats with a particular focus on cash float management. It will also cover the benefits and pitfalls of maintaing a cash float in a retail business.

• Disbursement float: When a check is issued but is yet to be cashed by the receiving end. This means the issuer’s account balance appears higher as the check is not fully cashed. The issuer will actually have less money readily on hand than what is displayed on the bank account balance.
• Collection float: The opposite of a disbursement float. A collection float refers to when a recipient has acquired a payment, often in form of checks. Check processing delays from the bank means it has not been cashed into the recipient account yet. So, they have a lower account balance than what is owed.
• Net float: The sum total of all the various cash floats. It gives a better understanding of temporary discrepancies in a company account and how this impacts the in goings and outgoings of company cash flow. Enterprise businesses managing money transfers may experience cash float as funds remain in intermediary accounts for a few days before reaching their final destination.

A petty cash fund is a small amount of readily available physical cash. Typically, a designated amount. It is used for minor expenses for business operations.

When not documented well it can become a part of the cash float.

In retail it is different from a cash float which refers to the amount of cash kept in the cash register at the beginning of a business day. It is used primarily to provide change to customers during transactions.

These terms can cause confusion as they sound similar. However, they refer to different things.

A cash float exists as a small amount of cash on hand at the beginning of a working day. Popular in retail in a cash register.

Cash flow refers to the total amount of cash in and out of a company’s bank accounts over a set time period. The difference between a business’s accounting records and the actual cash can occur due to delays in processing payments, affecting the available balance in the company’s bank account. It reflects the financial health of a retail business.

Cash float can influence cash flow.

In retail, a cash floats purpose is multifaceted.

A cash float facilitates smoother customer transactions. For example, if a retailer’s customer base use mainly cash, a cash float is essential for easy exchange of change.

A successful cash float means a cashier can provide the correct change from a good denomination mix for different scenarios, i.e. cashback.

Additionally, a well maintained cash float helps retail operational efficiency.

Having sufficient cash in a register means not having to take often trips to the bank to retrieve it.

This leads to improved customer experience as transaction times are reduced by avoiding delays to retrieve cash from another source.

When determining the initial cash amount to put in the register there are various factors to consider. These could be evaluating daily sales volumes, whether payments are predominantly cash or card and company growth patterns.

A cash float could range and it is dependent on the size of a retail business and there transactional volume.

Determining the right amount of cash for your retail business ensures flexibility to meet customer needs and small operational expenses.

A denomination mix is the specific make up of different denominations (bills and coins). This is partially dependent on the number, average size of transactions and change requirements within a retail business. This can help determine whether more of one denomination will be more useful than another.

For example, a retail company typically dealing with smaller transactional sizes may benefit from acquiring larger proportions of smaller denominations. Another example being if a company have a high volume of cash transactions a larger overall denomination mix will be better.

You can regularly review the effectiveness of a denomination mix via evaluation of real time usage and feedback from cashiers.

Part of successful cash float management is daily reconciliation. In retail this process is balancing the cash register at the end of every business day.

There are two key components to daily reconciliation:

1. Counting the total cash balance from the day and deducting the initial float to work out the earnings from the day and then removing the profit from the cashier.
2. Matching up the actual cash to recorded transactions and receipts and documenting it with any discrepancies.

Delays in money transfers can affect the reconciliation process due to the temporary cash float that occurs while funds are held in intermediary accounts before reaching their final destination.

This is to prevent theft and inaccuracy of financial records enabling smoother operations.

The float may need to be adjusted for various reasons to maintain optimum cash flow. This may mean changing the configuration of denomination or increasing/decreasing float size.

Important reasons to look out for:

1. Significant changes in transactional volume, average transactional size, business growth trends and regular inconsistencies in float amount.
2. Seasonal trends like the summer season can affect float amount in some retail businesses.

Once all factors have been considered you can determine whether to adjust to a new float for the start of a business day.

Implementing security measures is vital for a well maintained cash float.

These measures include:

• Daily reconciliation
• Keeping access logs
• Lockable drawers on cash registers
• Limited access to authorised personnel
• Limiting the cash on hand in cash register

In the unlikely event of a cash float not being well maintained, change shortages can occur that disrupt seamless transactions and increase customer waiting times.

However, when a cash float is regularly replenished and has a good denomination mix there is high operational efficiency.

Quicker and accurate provision of change which improves customer service and optimises cash flow.

Accurate daily reconciliation allows a retailer to clearly see their daily earnings and identify shortages and overages.

Accurate documenting means any discrepancy patterns and trends are reflected easily. From there it can be investigated to the cause and in turn prevent things such as theft.

Security measures increase protection against theft and fraud.

Secure cash registers and storage help to prevent theft.

Clear documentation such a daily reports and regular audits and access logs help to identify any fraudulent activity and encourages accountability among employees.

Mismanagement of a cash float can lead a number of issues.

Reconciliation done incorrectly whether that is out of inaccuracy or infrequency can lead to errors in the cash balances going completely unnoticed. This is made worse if the errors are caused by bad intent and is still going unnoticed.

Poor documentation of transactions can lead to cash being unaccounted for because transactional records and physical money on hand do not match up. This is troublesome, causing a disruption to cash flow and reduces operational efficiency.

A very real challenge is the threat of theft and fraud. This could be an external or internal issue which is why putting preventative measures in place is essential.

An internal threat could be employees stealing from the register, especially if there is weak security measures and infrequent cash float reports.

Externally, the cash float in cash registers can be a target for robberies.

Bookkeeping entails marking up sales through regular reconciliation.

Initial float from the beginning of the day has to be acknowledged when recording the end of day balances. Daily earnings need to be worked out.

This is done by counting up the end of day total cash balance and subtracting the initial float. If there are any inconsistencies, they should be recorded and corrected.

PayComplete can provide cash hardware and software solutions for streamlined cash management in your retail business.

Our products can provide security to your cash float to combat theft and fraud and CashTech (solutions to enhance cash management) can produce real time data so you can easily adjust your cash float based on the current trends of your retail business.