To reconcile a cash drawer, count every bill and coin in the till, subtract the starting float, and compare the remainder to the cash sales figure on your end-of-shift POS report. If the two numbers match, the drawer is balanced. If the remainder is lower, you have a shortage; if it’s higher, an overage. Either gets recorded on a reconciliation form, signed by you and a supervising manager, and filed with the day’s cash.
The rest of this guide walks through each step, then covers what federal law says about the two situations cashiers ask about most: an employer trying to deduct a shortage from a paycheck, and an employer trying to require a polygraph over missing cash.
What You Need Before You Start
Pull three things together before you touch the drawer:
- The starting float (sometimes called the bank) — the pre-counted currency placed in the drawer at the start of the shift so cashiers can make change. Most retail businesses set this somewhere around $100 to $200, though higher-volume stores may go up to $300 or more.
- The end-of-shift report from your POS. Different systems call it a Z-report, a terminal closeout, or a shift summary. You only need the cash sales figure to reconcile, but printing the full report creates a complete record of the shift.
- A blank reconciliation form. Fill in the header first: date, register number, your employee ID, and shift time. When someone has to investigate a discrepancy three weeks later, the header is how they find the right form.
Counting the Drawer
Organize every bill face-up and in the same direction, sorted by denomination. Group coins into standard increments. Messy sorting is where most counting mistakes happen. A single $20 stuck between two $10s throws off the total by $10 and creates exactly the kind of discrepancy that triggers a review.
Record each denomination on its own line of the reconciliation form. Pennies through half-dollars on the coin side, ones through hundreds on the bill side. That line-by-line breakdown is the whole point of the form: if the total is off, you can see exactly where the count went wrong instead of recounting the entire drawer from scratch.
Count the full drawer twice. The second pass is a basic safeguard against miscounting, and it takes far less time than investigating a phantom shortage. Once both counts agree, write the final total on the form. That number is every dollar physically present in the till at that moment, before you subtract the float or compare anything to the POS report.
Doing the Math
Take the total physical cash in the drawer, subtract the starting float, and compare what remains to the cash sales figure from your POS report. If the leftover cash is less than the expected sales total, you have a shortage. If it’s more, you have an overage.
A worked example: your drawer holds $487, the float was $150, and the POS report shows $340 in cash sales. That leaves $337 in the drawer after removing the float, which is $3 less than the system expected. You record a $3 shortage.
Overages sound like good news but signal the same underlying problem as shortages: something went wrong during a transaction. The most common cause is giving a customer too little change. Financial departments track both directions over time because a consistent pattern points to a recurring process problem or, less commonly, intentional manipulation.
How much variance triggers a formal response depends on the business. Some companies flag any discrepancy over $2 or $3 for supervisor review; others set the threshold higher. What consistently draws scrutiny is a pattern. Three or more unresolved discrepancies within a short period, regardless of dollar amount, is a common trigger for a closer look at a specific employee or register.
Handing Off the Cash and Signing the Form
After the count is complete and recorded, the cash goes into a tamper-evident deposit bag or a locked safe in a restricted area. The reconciliation form needs two signatures: yours as the employee who performed the count, and a supervising manager who witnessed or verified it. Those signatures are a shared acknowledgment that both parties agree on the drawer’s financial state at handoff.
The accounting department uses the signed reports to reconcile daily revenue, verify bank deposits, and prepare tax filings. Finalized forms get archived either digitally or in physical files.
If Your Employer Wants to Deduct a Shortage From Your Pay
When a shortage turns up, some employers try to deduct the missing amount from the cashier’s paycheck. Federal law does not outright ban that practice, but it draws a hard line: no deduction can reduce your pay below the federal minimum wage of $7.25 per hour for that workweek. The regulation requires wages to be paid “free and clear,” meaning any kickback or deduction that cuts into the minimum wage violates the Fair Labor Standards Act.1eCFR. 29 CFR 531.35 – Wage Payments Under the Fair Labor Standards Act of 1938
The restriction gets tighter during overtime weeks. Deductions for shortages in a workweek where you earned overtime are scrutinized more closely because they can effectively erase the overtime premium. If a deduction in an overtime week drops your effective hourly pay below the required rate, it’s illegal.2eCFR. 29 CFR Part 531 – Wage Payments Under the Fair Labor Standards Act of 1938
Many states go further. Some prohibit shortage deductions entirely unless the employee admits in writing to taking specific cash. Others ban deductions from shared registers where multiple employees had access during the shift. A handful of states block shortage deductions altogether, treating them as a cost of doing business the employer must absorb. If your employer docks your pay for a drawer shortage, check your state’s wage deduction law before accepting it as final.
If Your Employer Wants to Polygraph You Over a Shortage
Federal law prohibits employers from requiring or even requesting that employees take a lie detector test in most circumstances.3Office of the Law Revision Counsel. 29 USC 2002 – Prohibitions on Lie Detector Use A narrow exception exists for ongoing investigations into a specific theft or economic loss, but the requirements are strict enough that routine cash shortages almost never qualify.
To use the exception, the employer must show three things: the employee had access to the missing funds, the employer has a reasonable suspicion that the specific employee was involved, and the investigation targets a particular incident rather than general cash-handling problems. “Reasonable suspicion” means an observable, fact-based reason to believe that employee was responsible. Simply having access to the register is not enough on its own.4eCFR. 29 CFR 801.12 – Exemption for Employers Conducting Investigations of Economic Loss or Injury
Even when those conditions are met, the employer must deliver a written statement at least 48 hours before the test. The statement must identify the specific loss, describe the employee’s access, and explain in detail why the employer suspects that employee. It must be signed by someone authorized to legally bind the company, not by the polygraph examiner. The employer has to keep a copy on file for at least three years.4eCFR. 29 CFR 801.12 – Exemption for Employers Conducting Investigations of Economic Loss or Injury
The regulation specifically states that routine cash register shortages do not meet the threshold for an economic loss investigation. An employer who tries to polygraph a cashier over a $15 shortage is violating federal law, and the employee can refuse without facing termination or discipline for that refusal.4eCFR. 29 CFR 801.12 – Exemption for Employers Conducting Investigations of Economic Loss or Injury
How Long to Keep the Records
Reconciliation forms feed into both tax and payroll recordkeeping, so two federal retention rules apply.
The IRS ties record retention to the period of limitations on your tax return. For most businesses, that means keeping records that support income, deductions, or credits for at least three years from the filing date. If your business files a claim for a bad debt deduction or loss from worthless securities, the period extends to seven years. And if you fail to report more than 25 percent of gross income, the IRS has six years to assess additional tax, so the supporting records need to survive at least that long. Employment tax records carry their own four-year retention requirement, measured from the date the tax was due or paid, whichever came later.5Internal Revenue Service. How Long Should I Keep Records
Federal wage and hour regulations require employers to preserve payroll records for at least three years from the date of last entry. Supplementary records like time cards, wage rate tables, and records of any deductions from employee pay must be kept for at least two years.6eCFR. 29 CFR Part 516 – Records to Be Kept by Employers Daily cash reconciliation forms fall into this framework because they document the revenue that feeds into payroll calculations and tax reporting. Practically, keeping reconciliation records for at least three years covers both sets of requirements.