When restaurant bill is paid party in cash and partly with credit card(s), neither the credit card amount nor the tip amounts are correct.
Let's say a group of ten friends gets a dinner bill for $500. Nine of the ten throw in cash, and the last person pays with credit card. In most cases, the cash amount already exceeds the total amount of the bill, so there's no balance remaining to charge to the card. In fact, there may be a negative balance remaining and I owe them cash back!
Even if there is a positive balance remaining, it will be artificially small (like, $1.25) because all the cash-payers have added a tip into their payment, which unintentionally subsidezes the tenth person's meal. She pays just $1.25, which obviously isn't right.
And when she does pay the $1.25 balance, she'll leave a tip on that amount, not the $500 total bill, which also isn't right.
Bottom line: We get a lousy 0.5% tip on a $500 dinner check. But try explaining that to the guests, who all believe (correctly) that they've already left you a generous cash tip.
How does Square handle this situation?
Hey @The_White_Hart - This is a very interesting point you bring up. I haven't been able to surface a direct solution for this through the app, but I'll ask our Product team and will update you once I've heard back.
In the meantime, there are a couple of options I can think of to help:
1) Automatic gratuity for larger parties (i.e. "For parties larger than 6 people, we will add an 18% gratuity") - Tip is guaranteed and the total amount that the party sees on their bill includes the tip already. To do this, you can create an item and call it Gratuity, but make it a variable amount (leave the price blank). While ringing them up, you add it as an item onto their bill and would just set the price based on the percentage of tip you want.
2) Have a no-split bills policy - Personally, my friends and I will have one person pay with card and we all give that person cash (or use P2P money transfer apps like Square Cash) to make things simpler on the server. However, I've seen many places who actually institute a policy for it. This leaves it to the person with the card to calculate the correct tip based on the total bill or they can check a box if you're using the Quick Tip feature which will calculate different % tips of the total for them. They then take the responsibility of ensuring that they're receiving the correct amount of money back from their party rather than you having the awkward conversation about tips with them.
Yes, we have a no split bills policy, it makes things so simple and customers do not mind at all. Just inform them of your policy if they ask you to split the check and 99% are very understanding. The other option is seperate checks for each couple.
Thanks for the tips (so to speak). Of the two, I prefer adding a mandatory gratuity. Most places have a large-party policy, so this won't seem unusual or out of place. I dislike forcing the group to pay with a single credit card (even though it's easier for me) because it places one patron in the awkward position of paying for all her friends, which probably wasn't their plan when they arrived.
Let's be clear: Square POS software is forcing me to change my business policies and the way I treat my customers. That's a bug, not a feature, and needs to be fixed.
We don't do much bill splitting, but I do know that when you hit Split, you can select how much money you want to put on cash & credit. It seems that in your scenario, the cash each person was putting in was also including tip.
Here's a few potential solutions:
1. If you set aside part of the cash you took for tip, and put in the cash as the cash you received minus tip. So for your example, you received $498.75 in cash on a $500 bill, and each person should have paid $50 towards the bill, only put in $450 cash, take the extra $48.75 for tip, and then charge the last person in credit $50 as they should pay.
2. Charge the credit card first, then take the rest in cash and take the leftover for tip.
3. Require anyone who splits to write down how much money would come from each person for the bill and for tip on the back of the Ticket Receipt.
Hope this helps!
That's helpful, thanks. I'll experiment with #2 and see how well that works in practice. #1 would also be just as effective, but requires more paper-and-pencil work to tease out the cash-payers' combined total before entering the cash amount. I'm not a fan of #3 because it requires interrogating each of the guests, which is both awkward and time consuming, although it would work, too. Thanks.
As a customer I've seen a lot of bars and restaurants (even those that don't use Square) use #3 when they can't or have a policy of not printing separate checks for each guest in a party. No interrogation needed, just pens to write their amounts and names or last 4 digits of the card number on the bill.
Sounds great! Let me know how it works!