Common Cents Act Clears Congress: What Restaurants Should Know About Cash Rounding

The penny may seem like a small issue, but for restaurants and other businesses that handle cash every day, its phaseout creates some very practical questions.

The Common Cents Act recently cleared both houses of Congress and, as of October 5, is awaiting presidential action. The legislation would create a national framework for handling cash transactions when exact change is not available. The federal government has already stopped manufacturing new pennies, although the roughly 114 billion pennies already in circulation remain legal tender, according to the U.S. Department of the Treasury. U.S. Department of the Treasury

For restaurants, this matters more than it might seem. More than one-quarter of restaurant industry sales are still paid in cash, according to the National Restaurant Association. When a register shows a total such as $18.42 and the restaurant does not have pennies available to make exact change, operators need a clear and consistent way to handle the difference. NRA

How would cash rounding work?

Under the Common Cents Act, businesses could use a standard rounding method when exact change cannot be provided in a cash transaction. The legislation provides that totals ending in 1, 2, 6 or 7 cents may be rounded down to the nearest nickel, while totals ending in 3, 4, 8 or 9 cents may be rounded up. Totals already ending in 0 or 5 cents would require no adjustment. The full rounding provisions are available in the federal legislative text for the Common Cents Act. GovInfo

The important word is cash. Credit cards, debit cards, electronic transfers, checks, gift cards and similar payment methods would continue to be processed to the exact cent under the legislation. GovInfo

This is also not the same thing as changing menu prices. The sale, including applicable taxes, is calculated first. Any necessary rounding occurs at the end of the cash transaction. Current Treasury guidance on the penny phaseout similarly recommends applying cash rounding only after taxes and other charges have been calculated. U.S. Department of the Treasury

The accounting side still matters

A few cents on one transaction may not sound important. Across hundreds or thousands of transactions, however, those adjustments still need to reconcile properly with the restaurant's POS reports and cash drawers.

Restaurant operators should make sure their POS system can distinguish a legitimate cash-rounding adjustment from a cashier shortage or overage. Treasury also notes that businesses may choose to update their POS systems so the rounding adjustment appears clearly on customer receipts. U.S. Department of the Treasury

From a bookkeeping standpoint, the goal is simple: sales and sales tax still need to be recorded correctly, while legitimate rounding differences should be accounted for separately rather than disappearing into an unexplained cash variance.

Operators should also train anyone handling a register so the same process is followed consistently. Allowing every cashier to decide independently how to handle pennies is a good way to create guest confusion and messy cash reconciliations.

What should restaurant owners do now?

There is no reason to start changing menu prices or rounding electronic transactions.

The Common Cents Act has cleared Congress, but it is not yet law as of October 5. Businesses should continue watching for presidential action and any additional implementation guidance. GovInfo

In the meantime, restaurant owners can ask their POS provider how its system handles cash rounding, review their cash-control procedures, and decide how rounding adjustments will eventually be reflected in their bookkeeping.

The penny may be disappearing, but those few cents still have to go somewhere in the books.

Danielle Williams is the founder of TrueCount Services, providing restaurant-focused bookkeeping and financial management services in Middle Tennessee and remotely across the U.S.