Processing cash is costly. Between banking fees, CIT charges and high rates of cash loss – not to mention the labor costs associated with handling cash – there are a number of expenses that come hand in hand with accepting cash in your business. And, with cash remaining the favoured payment method for many consumers, it seems that businesses will need to navigate these costs for many more years to come. But with small changes to process and an investment in relatively inexpensive cash management technology, retailers can streamline their cash management and reduce the cost of cash to their business.
Firstly, let’s look at why retailers would need to reduce the cost associated with cash processing. In the retail industry, margins are tighter than ever and the competition for customers is ever more fierce. Plus, with high street footfall dwindling and wages increasing across both the UK, and the US – companies are increasingly looking for innovative ways to drive revenue, generate savings and implement operational efficiencies.
And, as if falling sales and higher wages weren’t a big enough problem for retailers; higher banking costs are further squeezing their already wafer-thin margins. In Europe, banks are continuing to withdraw from the high street at an alarming rate – closing branches, and cutting the opening hours of those that remain. This means that businesses are now more reliant than ever on CIT services – which can prove costly. And with many banks increasing their deposit fees retailers are struggling to mitigate the costs associated with cash management.
Reducing the cost of cash
Below then are four best practices for retailers to reduce the costs associated with cash handling, processing and management:
- Optimize change ordering
Unfortunately for many businesses, providing change comes will 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. Plus 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.
- 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. Invest in intelligent cash counters to ensure all deposits that are prepared for banking are accurate.
- 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. Reduce the labor costs associated with cash management by automating manual processes. This will not only directly impact your bottom line, but could also improve morale – with staff no longer required to stay behind after their shift has ended to reconcile cash drawers or safes. Plus, with laborious and time-consuming tasks automated your staff will be free to spend more time on the shop floor, generating sales.
- Reducing shrink
Shrink is a big problem for retailers. The 2015 Global Retail Theft Barometer highlighted that in 2014-2015 shrink cost global retailers $123.39bn. And, rather surprisingly, the leading cause of this shrink was no longer shoplifting, but internal theft. Employee theft accounted for 39% of all shrink according to the research – with the majority of this occurring at the point of sale. 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 optimized 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.