Reducing the threat of cash loss is one of the primary concerns for Loss Prevention executives, and rightly so. Protecting your cash from the threat of theft, caused by both internal and external factors, is important to maximize profits. When it comes to the causes of cash loss, bad security isn’t the only vulnerability your stores face. Poor and inefficient cash handling procedures are making your business vulnerable to cash loss – but there are ways to minimize this risk.
Handling cash is a necessity in a retail organization. To make money you must deal with money. But this often comes at a price. In busy environments, it’s easy for checks to be missed, procedures to be bypassed and cash to go missing.
The 2020 National Retail Security Survey found that shrinkage is at an all-time high, accounting for 1.62% of a retailer’s bottom line, costing the industry $61.7 billion. Almost twice as many businesses reported shrink rates of 3% or higher compared to previous years.
You see, cash loss can be a big problem for businesses who haven‘t automated or fully optimized their processes around security, inventory and cash.
Below are 3 ways poor cash handling practices could be leading your stores to lose cash:
- Manual counting and data entry: Counting cash by hand takes time. This means store managers need additional periods – before and after stores open and close – to count tills, reconcile deposits, and count safes. So, how is this impacting your bottom line? Labor costs add up quickly and with minimum wages increasing, these labor costs have become an immediate priority for some of the world’s biggest brands.
The longer the cash is out in the open, the more exposed it is to internal or external factors. Whether drawers are being counted in a back office or at the point of sale – while cash is being counted, it can easily be subject both intentional and unintentional shrinkage. Finding a way to automate manual cash handling will not only help operational efficiencies but will also provide more security around your staff and your cash – reducing instances of cash loss.
- Deposit discrepancies: According to the National Retail Survey 2015, over 16% of shrinkage comes from administrative or paperwork errors. Your store managers are busy. They take care of employees, suppliers, handling back office paperwork, answering phones and handling customer issues. Many times, they are doing all of this while also trying to count cash at the end of the shift and prepare the deposits. Although the manager might believe they have reconciled a 100% correct deposit, there are often discrepancies or unintentional errors found.
These errors will undoubtedly be picked up once a deposit gets to the bank – and this can mean costly deposit correction fees. Do you know how much your banks are charging for cash deposit discrepancies? How long does it take for your Treasury Department to notify Loss Prevention or Operations of these discrepancies? How much time and effort does it take for a full investigation of a cash discrepancy that potentially happened a month ago? If the answers to these questions surprise you, it might be time to look at the accuracy of and procedures surrounding your deposit reconciliations.
- Unclear or lax processes: Ask yourself this, do your stores perform regular spot checks? Are change deliveries counted and verified? Are your managers ensuring that cash management processes are clearly laid out and that all staff are trained on these? When cash management processes are unclear or difficult for your staff to follow, it can leave your stores vulnerable to cash loss. But, it’s not just sloppy processes that can lead to a cash loss problem. Overly strict cash loss procedures can also cause issues. Zero-tolerance policies can often lead to a “cover-up” culture at store level – where staff feel obliged to make up losses from their own pockets. And whilst this might solve the immediate issue of cash loss, it isn’t addressing the true cause.
What else can improve your cash handling?
So, if there is a chance these poor cash management practices falling under the radar in your stores, then you should take first steps! There are simple solutions to improve poor cash handling procedures that protect your money as well as your staff.
Automating and even eliminating manual processes such as cash counting and manually entering in deposit data can help eliminate cash loss across your business. Whether the cash loss across your stores is intentional or unintentional, automating part or even all of the process will reduce both the margin of error and opportunities for theft.
For that reason, investing in a cash management system will help automate your cash handling procedures, whilst driving efficiencies in drawer reconciliations and deposit preparations. It‘s the first line of defence against cash loss in your business. Intelligent solutions such as cash counters, intelligent cash drawers, smart safes with cash office software (like TouchViewer or LiveDrawer Manager) will help expose and rectify poor cash management – reducing cash loss, and boosting your bottom line.
Unsure of what is the right solution for your business? In our Ebook ‘The Cash Management Jungle’ you’ll find guidance on what solution might be the one for you!
The Cash Management Jungle – Ebook