What Is a Payout?
A payout (or “paid out”) is the removal of cash from the register during an open shift for a non-sale-related reason.
Payouts are used for various operational expenses and cash disbursements. They are a necessary part of daily retail and hospitality operations, but because they reduce the cash in the drawer, they must be meticulously tracked and documented in the Point of Sale (POS) system to maintain accurate cash handling and clear financial records.
Common Reasons for Payouts
Payouts are used to handle a variety of small, cash-based business expenses that arise during a shift:
- Petty Cash Purchases: A manager or employee might need to purchase last-minute store supplies, such as cleaning products, office supplies, or batteries, and will use cash from the till to pay for them.
- Vendor and Delivery Payments: This includes giving a delivery driver their fee in cash, or paying a small, on-site vendor for a service or product.
- Employee Reimbursements: A payout may be used to reimburse an employee for an approved, out-of-pocket business expense.
- Cash Tip Distribution: In some businesses, payouts are used to disburse cash tips to employees at the end of their shift, especially if those tips were received via a credit card and need to be paid out in cash.
Unlike refunds, which are linked to a specific sale, payouts are operational and don’t impact revenue. However, they still reduce the cash in the drawer and need to be recorded properly.
How It’s Recorded in POS
The process of recording a payout is designed to be simple, auditable, and secure:
Function Access: The cashier or manager accesses the “Payout” or “Cash Out” function, typically found in the POS control panel.
Amount and Reason Entry: They enter the exact amount of cash being removed. Crucially, they are then required to provide a reason code or a short description (e.g., “driver fee,” “office supplies,” “tip payout”). This note is essential for creating a clear audit trail.
Logging and Adjustment: The POS system logs the transaction, including the amount, the user who performed the payout, and the timestamp. The expected end-of-shift cash balance is then automatically reduced by the payout amount.
Receipts and Documentation: Many systems generate a small receipt for the payout, which can be signed by the person receiving the cash. This receipt can then be stapled to a corresponding physical invoice, creating a clear paper trail for accounting.
Security Measures: To enhance security and prevent unauthorized withdrawals, many businesses restrict the ability to perform payouts to managers or specific staff members. Some systems may require a manager’s PIN for every payout, or require dual sign-off for amounts over a certain threshold.
Why It’s Important for Retailers
Proper tracking of payouts helps a business:
- Ensure Accuracy: Clear documentation helps prevent discrepancies and supports accurate end-of-shift cash reconciliation. Payout summaries are typically included in daily reports, making it easy to track where cash went and who authorized it.
- Control Cash Flow: By tracking every payout, a business gains a clear picture of its petty cash expenses. This data can be used to set budgets and identify areas where costs could be reduced.
- Prevent Theft and Fraud: Restricting permissions and logging every payout creates a system of checks and balances that significantly reduces the risk of unauthorized cash removals.
- Streamline Accounting: Accurate payout records make it easier for accountants to categorize these expenses correctly, simplifying bookkeeping and financial reporting.
In short, payouts are a necessary and frequent operational action. The key is to manage them with a structured, secure, and transparent process.
