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Managing Cash Over Short

Cash Over Short is the difference between the cash you actually have in the register at the end of day and the amount the register report says you should have.

Most of the time it is a very small number (i.e. less than a few dollars) and is a result of register mistakes, including:

  • Miscounting money (by far the most common)

  • Rounding when giving change (I'm out of pennies, so here's a nickel)

  • Processing a refund incorrectly (she paid credit, I entered a credit refund, and then counted cash out and gave it to her)

  • Processing an Accounts Receivable account incorrectly (I was supposed to bill that drug to the doctor's office account but hit the Cash button on the register instead).

The last two might result in larger amounts but are easily correctable once discovered.

Another more serious reason to have money in the Cash Over Short account is theft, and this is a big reason you want to pay attention to it. Just like you would care about a few tablets of oxycodone (even though it costs pennies) if it led you to suspect theft, you should care about small amounts of cash too because it could signal theft among your employees.

Think about this too - if an employee is willing to steal cash from you, wouldn't they be more likely to steal medication?

By keeping tight control over the Cash Over Short account you will be able to deter theft and more quickly detect theft when it does happen.

With that being said, here are some tips to handle cash over short:

1. Set clear policies and procedures

Your pharmacy should have clear guidelines in place about counting the register at the end of the day, comparing it to the register report to calculate Cash Over Short, and what to do if there is a large amount calculated. Should the technician (or pharmacist on duty) investigate it that night? Should they notify the manager to investigate? If so, should the manager be notified right then or during the next business day? If the manager is on vacation, who will investigate it?

You also want to think about how much is enough (i.e. a 'large amount') to warrant further investigation into the cause of the loss as well as whether or not you will have policies in place for disciplinary action if Cash Over Short is a certain amount. Many places, for example, would set that amount at a few dollars.

If you think about these types of problems in advance, and prepare procedures for them before they happen, you will be much better prepared when it does happen.

2. Be sure everyone is individually responsible for their own register

If there are multiple staff members going in the same till it will be impossible to determine who is responsible for the shortage (or overage) at the end of the day. It of course makes it easier for someone to steal, too, because they are less likely to get caught.

Having one individual responsible for one till (and counting it down at the end of the shift) ensures you can track Cash Over Short back to the individual responsible.

For employees that are working the register it should come as a relief because they don't have to worry about being falsely held accountable for someone else's mistake.

3. Document and track Cash Over Short

After each person responsible counts down the till it should be documented and signed off on. Most places have the individual counting sign off on a deposit slip or even initial the register report.

In addition, you will be able to better track and investigate Cash Over Short if you have a central place to record each register and day's amount.

That's why I've made templates for you:

4. Look for patterns of loss

In addition to large amounts, be on the lookout for patterns of of loss, often small amounts, over an extended period of time. It can signal potential theft.

While it is difficult to put clear policies and procedures in place on what pattern(s) you would investigate (and probably best not to, because employees could then be aware of the types of loss that would give you cause for concern), it is a good idea to at least monitor Cash Over Short for individual employees and use your judgement to determine whether or not something warrants further investigation.

5. Budget for it in your Income Statement

While some companies will just lump the Cash Over Short in with other miscellaneous expenses, I recommend making it a separate line item on the Income Statement. By doing so, you can more easily determine if it is larger than expected, which becomes even more important if there are multiple locations with different managers reporting to a central office.

6. Investigate large discrepancies before assuming miscount or theft

No one likes being falsely accused, so by having clear procedures in place and following the above tips you can help prevent that from happening. If there are large amounts missing, however, it is also best to check for register mistakes, like processing a refund or A/R account incorrectly, before assuming the employee miscounted or stole money.

Having clear guidelines in place for how to investigate Cash Over Short will also help your pharmacists and managers better handle it without causing undue blame.

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Cash Over Short - Excel

This template will be by far the easiest way to track manage your Cash Over Short

Keywords: Accounting, Cash Over Short, income statement, diversion

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