Processing cash is costly. There are a few expenses that you need to think of when accepting cash. Not only are there the usual banking fees, CIT charges and the labor costs associated with handling cash, but theft can also be costly.
With cash remaining a relevant form of payment despite the pandemic, it seems that businesses will need to navigate these costs for many more years to come. But retailers nowadays can streamline their cash management fairly easily, and in doing so can reduce the cost of cash to their business. It only requires small changes to internal processes and an investment in inexpensive cash management technology, which in the case of Tellermate, has an ROI of just a few months.
In the retail industry, margins are tighter than ever and the competition for customers is fierce. Plus, with city centre traffic dwindling and living wages increasing – companies are increasingly looking for innovative ways to drive revenue, generate savings and implement operational efficiencies.
Another problem on top of falling sales and higher wages is that higher banking costs and card fees are further squeezing retailers already wafer-thin margins.
We also see banks closing branches and cutting the opening hours of those that remain, forcefully shifting towards cashless as it is more profitable for them. This results in businesses being more reliant on CIT services – which have proven costly. Many banks have increased their deposit fees in the past, which made it harder for retailers to mitigate the costs associated with cash management. In the battle against this, is it crucial to implement processes and technology, like smart safes, that can help optimize CIT collections and bank deposits or even allow to stock up ATMs in store instead.
Below are four best practices for retailers to reduce the costs associated with cash handling, processing and management:
1. Optimize change ordering
Unfortunately for many businesses, providing change comes with an unavoidable cost. But there is a way to reduce the fees associated with inefficient change ordering. Stop ordering your change based on gut feeling. Use data from your cash management technology to run an audit and order only what you actually need. And, by monitoring this data, you can ensure that you order before the tills run dry. This will eliminate the fees associated with emergency change orders.
2.Prevent Deposit Correction Fees
There’s nothing more frustrating than preparing a bank deposit, checking it twice, even three times, only to be told that your sums are wrong and that the bank will charge you a fee to rectify the deposit. Avoid deposit correction fees by removing the opportunity for human error. Intelligent cash counters can help ensure that all deposits that are prepared for banking are accurate.
3.Reduce the labor costs associated with handling, counting & transporting cash
How much time do your employees spend in the back office counting cash? What about preparing deposits, checking safes or setting floats? You can reduce the labour costs associated with cash management by automating these manual processes. Not only will this directly impact your bottom line, but it could also improve staff morale – There should be no need for an employee to stay behind after their shift has ended only to reconcile cash drawers or safes. With laborious and time-consuming tasks automated, your staff will be free to spend more time on the shop floor, generating sales.
4.Reducing cash loss
Shrink is a big problem for retailers. In 2019, NRF recorded 1.6% shrink among US retailers, costing the economy $61.7 billion. Similar numbers can be seen in Europe with 1.4%. And, rather surprisingly, the leading cause of this shrink was no longer shoplifting, but internal theft, with the majority of this occurring at the point of sale. Retailers now also face new challenges in battling an uprise in return fraud and ecommerce crime.
Addressing this malicious cash loss could prove very profitable for businesses looking to improve their bottom line. Retailers should consider investing in loss prevention technologies as well as implementing stricter cash management processes.
So, while there may not be a hard and fast solution to the challenge of eliminating the cost of cash – there are steps that businesses can take to ensure that their cash management is optimised and that unnecessary costs are mitigated.
By stepping up security, implementing cash management technology and using data to accurately forecast demand, retailers can significantly reduce the costs associated with their cash management.