Cash handling policy for employees: a template
A cash handling policy for employees is a one-page set of rules that says who may open a drawer, how the float is counted, when cash goes to the safe, how over/short is recorded and what happens after a variance. Copy the template below, fill in the bracketed amounts, and have every employee who touches cash sign it.
The template
Replace everything in [brackets]. Keep it to one page so it gets read.
- Scope. This policy applies to every employee who operates a register, makes a cash drop, prepares a deposit or counts a drawer at [business name], all locations.
- Drawer assignment. Each drawer is assigned to one cashier per shift. Nobody else rings sales on that drawer. When cashiers change, the outgoing drawer is counted and a new drawer with a fresh float is issued.
- Float. Every register starts with a float of $[150.00] in the breakdown on the float record. The opener counts it before the first sale and initials the count.
- At the register. No personal money, wallets or tip jars inside the drawer. The drawer stays closed between transactions. Change is counted back to the customer. Large bills ($[50] and up) are checked before they go in the drawer.
- Voids, refunds and no-sales. Voids after a sale is completed, refunds over $[25.00] and every no-sale drawer opening need a manager's approval and initials.
- Paid-outs. Cash leaves the drawer only with a paid-out slip showing amount, reason and manager initials, with the receipt attached.
- Cash drops. When bills of $20 and above in a drawer pass $[200.00], the manager removes them, counts them with the cashier, records the drop on the drop log and puts it in the safe.
- Closing count. Drawers are counted in the office, using a blind count: the counter writes the total before seeing the register's expected cash. A manager compares the two.
- Variances. Every over and every short is written on the over/short log. A variance over $[5.00] needs a written note the same night. [Three] variances over $[5.00] by the same cashier in [30] days leads to a review meeting, not automatic discipline.
- Pay deductions. [Business name] does not deduct drawer shortages from pay. [If you choose otherwise, have the wording checked against federal and state wage-deduction rules first.]
- Deposits. The deposit is prepared by [role], verified by [role], and taken to the bank by [time] the next business day. The bag number is written on the reconciliation sheet.
- Large cash payments. Any cash payment of more than $10,000, or related payments from one payer totaling more than $10,000 within 24 hours, is reported to [owner] the same day.
- Rounding. [Choose one:] Cash totals are given to the exact cent / When penny change is not available, cash totals are rounded to the nearest $0.05, the same way on every sale.
- Records. Count sheets, drop logs and over/short logs are kept with the register tapes for [4] years.
- Acknowledgement. I have read this policy and will follow it. Name: ______ Signature: ______ Date: ______
Who does what
| Task | Who | When | Record |
|---|---|---|---|
| Count opening float | Opener | Before first sale | Float record, initials |
| Approve void, refund, no-sale | Manager on duty | At the time | Receipt or log, initials |
| Cash drop | Manager + cashier | When drop limit is passed | Drop log |
| Closing count | Closer (blind) | After last sale | Count sheet |
| Compare with expected cash | Manager | After the count is written | Over/short log |
| Prepare and verify deposit | Two people | At close | Reconciliation sheet, bag number |
| Review variances by cashier | Owner or store manager | Weekly | Over/short log |
Why each clause is there
Clause 2: one cashier per drawer
If two people share a drawer, a short has two possible names and the log cannot show a pattern. The over/short math is in cash drawer over/short.
Clause 8: blind counts
A counter who sees the target number can stop when the count "matches". The method is in what is a blind cash count.
Clause 10: pay deductions
The US Department of Labor's Fact Sheet #16 (revised July 2009) gives, as an example of an illegal practice, a minimum wage cashier required to reimburse the employer for a cash drawer shortage. A deduction may not bring pay below the $7.25 federal minimum wage or cut into required overtime, and having the employee repay in cash instead does not get around that. State wage-deduction rules can be stricter.
Clause 12: large cash payments
The IRS Form 8300 guide says a business must file Form 8300 when it receives more than $10,000 in cash in a reportable transaction, within 15 days of receiving it; related payments from one payer within 24 hours are added together.
Clause 13: rounding
The US Treasury's Penny Production Cessation FAQ (December 23, 2025) says businesses may round, when penny change is not available, the final amount of a cash transaction to the nearest five-cent increment, in a fair, consistent and transparent manner, as non-binding guidance; states may approach it differently.
Clause 14: records
The IRS lists cash register tapes and deposit information as gross-receipts records, and says to keep employment tax records for at least 4 years and other records for 3 years in the basic case. Four years covers both; the IRS lists longer periods for specific cases, such as 6 years when income was underreported.
This is general information, not legal advice. Check your state labor department for current rules.
Give a copy of the signed policy to each new hire with their first schedule, and keep the signed page in their file. The store closing checklist puts clauses 8–11 in order for the closer.
Questions
What should a cash handling policy include?
Drawer assignment, float amount, rules for voids, refunds and paid-outs, cash drop limits, closing count method, variance thresholds, deduction rules, deposit steps, record retention and a signature line.
Can a cash handling policy make employees pay for shortages?
Federal DOL Fact Sheet #16 says a deduction may not bring pay below the $7.25 federal minimum wage or cut into overtime, and lists a minimum wage cashier repaying a shortage as illegal. State law can be stricter.
What is a cash drop?
A cash drop is removing excess large bills from a drawer during a shift, counting them with the cashier and moving them to the safe with a logged amount.
How long should cash records be kept?
The IRS says employment tax records at least 4 years and most other records 3 years in the basic case; keeping cash logs 4 years covers both.
Sources
- US DOL Wage and Hour Division, Fact Sheet #16: Deductions From Wages (revised July 2009) (checked 2026-11-12)
- IRS Form 8300 reference guide (checked 2026-11-12)
- US Treasury: Penny Production Cessation FAQs (December 23, 2025) (checked 2026-11-12)
- IRS: What kind of records should I keep (checked 2026-11-12)
- IRS: How long should I keep records? (checked 2026-11-12)