Key insights
- With the penny shortage, rounding to the nearest nickel is widely seen as practical, but various state and local laws as well as federal program requirements (such as SNAP) can restrict or complicate rounding practices.
- To avoid potential consumer protection issues and simplify the process, some retailers have resolved to round down all transactions to mitigate negative impact on consumers.
- Considerations for retailers include price adjustments, point of sale system changes, and adjustments to financial reporting practices.
How is the penny shortage affecting your store’s finances?
Coin collectors aren’t the only ones impacted by the U.S. Mint’s discontinuation of penny production. While we’re long off from being literally penniless (there are an estimated 300 billion pennies in circulation), it’s already having a significant impact on brick-and-mortar retailers.
Some retailers have implemented strategies, including encouraging customers to bring in pennies and receive a double-value gift card. Explore other options retailers have with the penny shortage and ways your store can prepare.
Penny shortage strategy for retailers: Rounding up or down
With fewer pennies in circulation, many retailers have started rounding cash transactions to the nearest nickel. The general concept is the ending value of a transaction is rounded up or down to the nearest five cents (i.e., 1, 2, 6, 7 round down, while 3, 4, 8, 9 round up).
While rounding to the nearest nickel is widely seen as practical, various state and local laws as well as federal program requirements (such as SNAP), can restrict or complicate rounding practices. States with pro-cash laws and ordinances or consumer protection statutes that may impact rounding up include California, Colorado, Connecticut, Florida, Illinois, Massachusetts, New Jersey, New York, and Texas.
To avoid potential consumer protection issues and simplify the process, some retailers have resolved to round down all transactions to mitigate negative impact on consumers.
The penny shortage and point of sale systems
If retailers choose to round cash transactions to the nearest nickel, there are factors to consider, especially involving your point of sale (POS) system:
- Will you rely on your sales associates to accurately calculate the rounding?
- Are you willing to accept your POS system’s sales reports won’t agree with the cash receipts? What amount of deviation will you accept?
- Can your POS system perform the rounding function?
- Will you update pricing to reduce sales involving pennies?
How CLA can help retailers with the penny shortage
Communication with customers is critical to avoid negative consumer sentiment or reviews. If you’re a franchisee, you can look to your franchisor for guidance and support.
Here at CLA, we have decades of experience advising retailers on financial matters. We can help you adjust your finance reporting practices and cash flow projections to account for rounding and possible price adjustments.
Contact us
How is the penny shortage affecting your store’s finances? Complete the form below to connect with CLA.