Article

Enhancing profitability through improved cash management

Retailers and FIs can work to improve the cash management cycle through the deployment of fully integrated cash-management systems.

December 7, 2009 by Ed Grondahl — EVP Global Sales, Tidel

Technology's impact on business operations continues to transform managerial controls and measurement while providing for profitability enhancement opportunities. Technology in the retail environment has predominantly focused on point of sale systems that integrate everything from transaction accounting to inventory management. Recently, retailers and POS system companies are focusing on the integration of cash handling with the POS system.

More progressive retail operators have already replaced traditional drop safes with cash management system — which incorporates the traditional benefits of a safe, such as robbery prevention and time-delay-change funds, but also employs bill-and-coin-handling technology, as well as its own operating system. Today's cash-management systems connect to corporate networks to facilitate data exchange and remote management.

Profitability enhancement

The cost of a CMS is very quickly recovered through the recurring savings garnered by the system itself. What initially may appear to be a "cost" quickly becomes a "profit generator" that produces annualized cash and non-cash savings. Typical systems pay for themselves within six to nine months, yet continue to produce savings indefinitely.

Retailers have found recurring cash savings in many areas. Specifically, internal theft is dramatically reduced; detection and rejection of counterfeit currency is improved; and armored car requirements are reduced. The latest and most exciting area of cash savings is now being gained through the retailer receiving "provisional credit" for funds in the CMS that have not yet been deposited at the bank.

Non-cash savings include a reduction of management time previously required to reconcile the transaction log with cash and preparation of bank deposits, as well as instant accounting and deposit preparation.

Deployment

Deploying a cash management system involves support and coordination among multiple departments, including finance, operations, information technology, security and loss prevention. And choosing the right CMS provider who can coordinate the physical and technological installation of the system can significantly expedite and smooth the process.

Each department should carefully consider features and functionality that will be required for a successful deployment and utilization of a CMS.

Below is a list, by corporate function, of features and functionality that should be considered or required.

Finance:

Instant access to all information pertaining to cash in the safe
Tools to access one or more stores and data, and place it in a spreadsheet
Guaranteed deposit by CIT
Provisional credit by the bank, with money deposited to the account, regardless of whether it's picked up or still in the safe at the store
Cut down on armored pickups, since credit is given by the bank
Automated cash reconciliation – no manual counting
Eliminate cash shrinkage by linking the safe and the POS
Lower the cost of buying coins and notes by recycling both
Lower the cost of coins by not buying coin rolls; use bulk bags
Elimination of cash counting at the beginning of the shift
Where cash rooms exist, eliminate 90 percent of the labor
Cost of annual software maintenance (get a five-year quote)
Cost of annual hardware maintenance (get a five-year quote)
ROI for any investment should be less than 1 year

Operations:

Eliminate cash shrinkage by linking the safe and POS
Balance each transaction between the safe and the POS
Simple computer-based training provided
Operate in the native language of each cashier to eliminate errors and make the system easier to learn and use
Dispense flat notes that are easy to handle instead of rolled up notes
Auto dispense each till (no cash-room counting) at start-of-shift
Auto bank-out of each till (no cash-room counting) to end shift
Speed time for cashiers to clock in and be on the lane
Quick access to cash to replenish tills with coins and notes
Eliminate counterfeit notes while customer is present
New notes are validated the day they come out by updating the note validators over the network — no delay waiting for updates
Totally eliminate cash counting and get deposit guarantees from CIT
On-site service call by next business day at a minimum
Help-desk diagnostic tools to help solve technical issues
Highly qualified service organization capable of analyzing the network

IT:

Must run an industry standard operating system, such as Windows, and use XML
Must have the ability to plug and play over the store's Ethernet network
Tools included for data collection over the network
Report-writer tool for creating and changing reports
Modern hardware architecture, easily told by integration (one power cord)
Must interface with POS at transaction level to stay in balance
No programming required to create a total CMS environment
Update CMS application over the network for new releases
Up-to-date note validators over the network when new notes are released
System diagnostics for help desk to support store personnel
Supplier has 24/7 help desk to support customer help desk or store directly
Hassle-free system that will not take IT resources to manage

Security:

Must interface with store's alarm systems
Must interface with store's camera systems
Must support a transaction log for up to 90 days so events can be analyzed and then used to search camera videos
Eliminates chance of an entire safe getting stolen

Loss prevention:

Balance every transaction with POS
Automated cash reconciliation (no cash counting)
Cashiers check in/out tills with no management assistance
Time-delayed access to all vaults
Additional vault for storage of change or high dollar items
Instant access to note validators for CIT guards
Audit trail to balance every penny of every cashier
Audit trail for all transactions for past 90 days
Eliminate counterfeit notes
Updated note validators over network when new notes are released by local government
Guaranteed deposit by CIT company
On-site repair service by next business day

Implementing a CMS solution is a decision that will impact your company from top to bottom. Each department's needs must be considered early in the process. When evaluating potential CMS suppliers and their systems, you should prepare a checklist that addresses all of their unique needs and use this checklist during your information gathering and quote processes.

Ed Grondahl is the marketing manager for Tidel Engineering LP. To submit a comment about this submission, pleasee-mail the editor, Tracy Kitten.