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How ATM cash management can close the window on waste

Never mind interest rates. Getting control of ATM cash handling costs can have a far greater impact on the bottom line, as a pair of industry experts explained in this week's webinar.

January 28, 2016 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

"Operating an ATM fleet without cash management is like turning up the heat to 'max' during the winter and then controlling the room temperature by opening windows. The result may be OK, but obviously it's not optimal."

But if there's a "not optimal," then there's an "optimal," and showing ATM deployers how to achieve it was the mission of a Tuesday webinar hosted by ATM Marketplace and presented by Wincor Nixdorf.

In the free, one-hour event, product manager Marco Goltz (author of the quote above) and senior software sales consultant Hugo Montiel showed the audience the real cost of ATM unavailability due to cash out, which can have a negative effect on both transaction income and customer trust.

With current interest rates so low, deployers might consider a little extra cash and a few more CIT runs an acceptable tradeoff to ensure machine availability and customer satisfaction. Montiel provided an example that might make them want to reconsider:

"Imagine your network has 1,000 cash points. Each of these cash points is being replenished in two stops per week. And interest rates are really low — for the sake of this exercise, say 1 percent. And let's assume that the CIT stop costs about 70 euros ($76.70), but keep in mind that these numbers could be different in a particular country or geography.

"So we put these numbers together and it implies that the overall cost would be 7.9 million euros ($8.66 million) per year for a network of 1,000 cash points."

Montiel said that cash management solutions typically promise an average of 10–25 percent savings on these costs. And again, he offered an example:

"Let's take 17 percent — the middle point — and what 17 percent would mean in savings. It would take a 5-year term, but we are talking about 7.5 million euros ($8.22 million) over a period of five years. If we consider the key cost components like CIT and interest — obviously there are other elements in the equation, but for the sake of simplicity, we take these two — broken down per year and category it gives us around 1.7 million euros ($1.86 million ) with most of it going to transport costs. And obviously as expected the smaller portion goes to interest savings."

Of course, Montiel said, accomplishing this savings requires some sort of investment, which is frequently cited as a disincentive. But assuming an average cost of 250,000 euros ($274,037) per year for the management service, he said, the savings still comes to approximately 1.5 million euros ($1.64 million).

The presenters also explained how the cost of cash as part of the total cost of operation can vary with the number of transactions, and that unlike other products and services that become less expensive when scaled up, cash actually becomes a larger relative expense.

And when this occurs, cash recycling can become an important solution for cost containment by reducing cash-handling needs, Goltz said. With cash recyclers, forecasting and planning naturally become more complex, he said, and "the case for cash management becomes more compelling." But with cash-in and cash-out in balance, the recycling device can go for weeks, rather than days, without a CIT visit.

In an example Goltz shared with the audience, the time between visits to a cash-recycling ATM was 15 days. "If we compare this with an ATM, here [with a cash recycler] we needed replenishment after two weeks. And if an ATM had been installed and demand had been the same, we would have six replenishments. So this is a big savings we have here."

Ultimately, he said, the important thing is to "make things plannable" while recognizing that "fixed schedules never fit," a tricky proposition, but an attainable goal. And an optimal outcome.

About Suzanne Cluckey

Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.