Enhancing Profitability Through a Cash Management System

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 (POS) systems that integrate everything from transaction accounting to inventory management. The most recent area of opportunity retailers and POS system companies are targeting is the integration of cash handling with the POS system.

Some of the most progressive retail operators have already replaced traditional drop safes with cash management systems (CMS). These incorporate the traditional benefits of a safe, such as robbery prevention and time delay change funds, but also employ bill and coin handling technology, as well as its own operating system. Today’s CMS connect to corporate networks to facilitate data exchange and remote management of the system.

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 annualised cash and non-cash savings. Typical systems pay for themselves within between six and nine months, yet continue to produce savings indefinitely.

Retailers have found recurring cash savings in many areas. Specifically, internal theft is dramatically reduced (cash received but not deposited into the safe); detection and rejection of counterfeit currency; and reduced armored car requirements. The latest and most exciting area of cash savings is now being gained through the retailer receiving provisional credit for funds in the CMS and not yet deposited in the bank. Non-cash savings include a drastic 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 CMS involves support and coordination among multiple departments including finance, operations, IT, security and loss prevention. Picking 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 utilisation of a CMS. Below is a list, by corporate function, of features and functionality that should be considered or required.

Finance

A CMS should offer instant access to all information pertaining to cash in the safe, as well as tools to access one or more stores’ data and place it in a spreadsheet. This allows guaranteed deposit by CIT – what the safe says is what’s deposited.

Provisional credit should be given by the bank when money is deposited in your account regardless if it’s picked up or still in the safe in the store – it also cuts down on armoured pickups. Automated cash reconciliation removed the need for manual counting – in fact, where cash rooms exist, this can eliminate 90% of the labour – while linking the safe and the POS eliminates cash shrinkage. The cost of buying coins can be reduced by using bulk bags, while the cost of both coins and notes can be reduced by recycling them. You can reduce the cost of annual software and hardware maintenance by getting a five-year quote, while the return on investment (ROI) for any investment should be less than one year.

Operations

Linking the safe and POS allows every transaction to be balanced. From an operations point of view, the CMS is easy to use, and computer-based training (CBT) is, in any case, provided. Systems operate in the native language of each cashier to eliminate errors and make the system easier to learn and use.

Cash handling
  • Dispense flat notes that are easy to handle instead of rolled up notes.
  • Auto dispense each till (no cash room counting of money) at start-of-shift.
  • Auto bank-out of each till (no cash room counting of money) 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 flat notes.
  • Eliminate counterfeit notes immediately while customer is still there.
  • 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.

It also provides on-site service call by next business day at a minimum, help-desk diagnostic tools to help solve technical issues and a qualified service organisation capable of analysing the network.

Information technology
  • Must run industry standard OS such as Windows, and use XML.
  • Must be plug and play over the store’s ethernet network.
  • Tools included for data collection over the network.
  • Report writer tool for creating/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.
  • Update 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 as required.

All in all, this should be a hassle-free system that will not take IT resources to manage.

Security

The CMS interface should store alarm and camera systems, as well as supporting a transaction log for up to 90 days so events can be analysed and then used to search camera videos. It means there is no chance of the entire safe being stolen.

Loss prevention
  • Balance every transaction with POS, so no chance of cash shrinkage.
  • 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 the local government.
  • Guaranteed deposit by CIT company.
  • On-site repair service by next business day.

There are other logistical costs and requirements that need to be taken into account, such as the ability to dispense loose coins and flat notes for applications such as cheque cashing, vendor payouts, debit-card cash-back, lottery payouts, etc. High-speed coin and note recyclers for high cash volume operations and special locking mechanisms for unique requirements might also be needed.

There may be additional concerns for multi-national companies, including service, support, parts, operational language, and currency handling for each country. Further practical considerations include the volume of note and coin storage, size of extra storage vault to handle reserve change and high value items, as well as the number of power outlets required.

Conclusion

Implementing a CMS solution is a decision that will have an impact on 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. Use this checklist during your information-gathering and the quote process so that you can choose a solution that satisfies all of your company requirements.

The decision will be obvious when you have an organised set of information and clear pricing for all of your costs. It’s best to do a cost of ownership over a five- or even a 10-year period. This is a team decision now that you have met the requirements of finance, operations, IT, security and loss prevention.

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