Cash management tops the agenda for CFOs

Dave Lunn TellermateNew research shows that cash management has been the primary concern for CFOs for the past few years, and will remain so until at least the end of 2016. And while CFOs and the other finance professionals interviewed may define cash management in its broadest sense of the term (all money flowing in and out of a business), at its very core, it relates to the handling, counting, auditing and movement of physical cash in and out of a business. Simple inefficiencies here can have a direct impact on a business’s bottom line. Proving that cash management firmly deserves its place on the CFOs’ agenda.

Back in 2014 a study by the Association for Financial Professionals found that 62% of the CFOs and other finance professionals who responded said that cash management was their main focus until at least the end of 2016. But, with more companies investing so heavily in electronic and mobile payment technology, why are so many businesses still so concerned with managing cold hard cash?

Why cash management is still an important issue for CFOS

Firstly, cash isn’t dead, or even dying. Despite the claims that cash is an outdated payment method, numerous studies, from Australia, to the US, have shown that cash is still the preferred payment method for a significant portion of consumers.

Take the most recent study from Cardtronics showing that 4 out of 5 consumers preferred to pay in cash, or the study by the Federal Reserve Bank of San Francisco showing that cash continues to play a key role in consumer spending. Or, there’s the Bank of England. All these organisations firmly support the evidence that suggests that cash does continue, and will continue, to have an important role to play in the payment landscape; regardless of the challenges from innovative new payment technologies.

Cash management tops agenda for CFOsOkay, so cash is here to stay. But why should CFOs care about cash management in their business? Well it’s simple. Poor cash management can lead to cash loss (through operational errors, employee theft etc.), high processing costs and wasted time. All of this eats into profits and drags down results.

Plus, as cash management procedures become ever more antiquated, managing your cash is set to become a more expensive task. Inefficient or under optimized procedures will mean that businesses will have to invest more time and manpower into simple cash management tasks. The longer your staff spend handling, counting or processing cash, the less time they spend serving customers or generating sales. Reducing labour costs associated with cash processing will also help to mitigate the costs incurred in other areas, such as the implementation of mobile payment technology.

How CFOs can navigate the cash management jungle

  • Invest in new technology: Whilst it may seem counter intuitive to invest in cash management technology when so many others are focussing on electronic, mobile or even wearable payment technology; it is important to ensure that each and every process is optimized to maximize the ROI. For cash payments, this means investing in cash counters, cash recyclers, intelligent till drawers, intelligent safes or even integrated cash management software. This technology can help automate manual processes, reduce waste, and address cash loss at source. All this means lower levels of shrinkage, happier staff and a more efficient business. But, investing in cash management technology is just the first step…
  • Implement a change in behaviour: Look closely at the attitude towards cash loss in your business. Are staff forced to make up cash losses from their own pocket? What impact is this having on morale and their propensity to steal or make mistakes? Is it creating a cover-up culture where ongoing cash loss and the reasons for this loss are hidden from management’s view? Are stores running slush funds to mitigate smaller losses? Challenge these behaviours and encourage a change in mind-set. Ensure all losses to be properly recorded and investigated. Similarly, ensure that an open and honest culture surrounding cash loss is fostered; enabling better visibility of, and control over, cash in your business.

It’s clear then that for the next twelve months at least, cash management will remain a big concern for CFOs and other finance professionals. But what about beyond 2016? Well, despite advances in alternative payment technologies, it seems that cash will continue to be a firm favourite with consumers; meaning that CFOs will need to continue to invest in their organizations’ cash management strategy for years to come. To maximize the ROI from cash management, CFOs must ensure that outdated processes are refreshed, new technology is considered and that attitudes and behaviours are challenged.

Want to learn how to automate your cash management? Download the Insider’s guide to counting cash by weight.

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