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A Long-Term Approach to Cash Management

Now, more than ever, businesses, companies and organisations need positive cash flow as quick as possible. Managing cash with a long-term outlook while putting steps in place to make short-term adjustments is a future proof way to increase cash flow.

Building a cash management culture

In many industries, such as quick serve restaurants and retail, the landscape has rapidly changed over the past year. These businesses were forced to temporarily close or change the way they serve customers and have gone through several phases of adaptations. Over the past year, we’ve seen businesses make choices that favoured cash optimisation and shorted merchandise. As many brick and mortar stores reopen their doors around the world, there are things they have learned in managing their cash that can set them up for long term success.

As shopper volume picks up, stores will likely increase the amount of physical cash they have in the tills each day, as well as the number of lanes or registers they open. This process deserves attention to detail and analysis, as it is an easy place to free up cash. In the early days of the pandemic, many organisations were giving more attention to weekly, and even daily, cash forecasting. Continuing that process as things reopen, and even through an entire season or year, will help your business see where you should place your cash over time and how it varies by location.

The short-term efforts in cash preservation brought on by the COVID-19 pandemic have put many organisations in a position to focus on sustainable cash excellence, supported by a strong cash culture from top to bottom.

Twenty pound banknotes in man's hands

Evolution for a cash revolution

In every area of every business, automation is almost always a goal. The same should be true of cash handling and processes. Yet, cash handling is an area that hasn’t evolved very far. Look at how far we have come with credit/debit payment processing and digital payment acceptance, and think about the kind of investment so many businesses have made to improve in these areas. Cash is still a valuable form of payment, but few have given any investment or attention on how to evolve cash management.

Cash management, compared to other things, can seem like a relatively small problem that needs to be addressed. In many ways, it is a small problem, and it doesn’t need a six-figure solution. You may not put cash management in the low-hanging fruit category, but hear us out. You can solve most cash management problems for as little as £35 per month at each location with tools like the Tellermate Touch and Touch Viewer and LiveDrawer and LiveDrawer Manager.

Visibility

A common error we see in cash management is creating the requirements for cash exposure based on the worst day and not the average day. For example, if a single location or even several locations had a day where they ran out of a certain denomination, that is what they use as the standard for every day when keeping that much cash isn’t really needed.

By tracking and having visibility to your cash over time, including the ebbs and flows of each denomination throughout the day, you will get a more accurate picture of the amount of cash you need on the floor. Using technology to count and track the cash that floats in and out of your stores gives you the ability to make decisions based on your own trends and data and not out of fear of the worst day.

True cost of cash loss

While there are costs to a sustainable management plan, there are arguably greater costs associated when you have a narrow approach. Small cases of employee theft, incorrect cash counts and mismanagement of cash will cause your organisation to bleed over time.

According to a survey from the National Retail Foundation, shrink averaged 1.62 percent of sales during 2019, up from 1.38 percent in 2018. Additionally, the average cost of managing and processing cash is 9 cents for every dollar. Combining these two figures gives a picture of how much is really lost without a cash management strategy, which can drastically reduce both of those numbers.

To protect your cash and profit, you will either spend time and money on preventative optimisation efforts in cash management that benefit the organisation in the long run, or you will spend time and money on more loss investigations, support staff and actual loss.

Properly designed internal controls and protocols are the best defence against cash loss.  Establishing and maintaining sound and practical internal controls ensures that every transaction is done correctly and that your cash is protected.

By not having a long-term mindset and approach towards cash management, businesses miss out on optimisation, risk reduction and liquidity. When businesses prioritise cash management, they can also increase profit margin and have greater accessibility to funds.

Learn how Tellermate’s LiveDrawer solution helped MediaMarktSaturn save both time and money with an ROI in just months. 

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