Everything you do in business has an ROI. And with every business activity, you aim for a high return on investment. After all, that’s part of the job of a CFO or head of finance—to reduce costs and get the most value for your dollar. Though you might play close attention to many of your ROIs, like marketing, labour, and inventory, there is one area of business that you might not consider, and it’s a significant one: cash management.
The way you manage your cash can have an effect on your bottom line. Poorly managed cash can hurt your ROI in many ways.
What Is Cash Management?
Cash management involves all of the activities required to handle the cash that comes in and goes out of your business, such as counting and double counting floats and end-of-night reconciliation, bank deposits, audits, transaction processing, and more.
Although necessary, cash management is costly, time consuming, and risky. It’s costly because of the direct and indirect expenses—such as labour expenses and equipment and supplies. It’s time consuming because it takes a lot of time to count, sort, report, store, and transport money—especially when it’s all done manually. And it’s risky because it comes with the chance of shrinkage, counterfeit fraud, robbery, and losses due to human error.
To get the highest return out of your cash handling procedures, you should invest in cash management solutions, such as counters, sorters, counterfeit detectors, and cash recyclers. These solutions will increase efficiency, security, and productivity while reducing your costs and the risks.
If you choose to continue to manage your cash in archaic ways, here’s how poor cash management will affect your return on investment.
Higher Labour Costs
As one of your largest expenses, your labour costs can really hurt cash flow and your bottom line. You should be doing everything possible to reduce this cost. Even a small reduction can have a huge impact on your return on investment. And considering businesses spend an average of 15 hours per day handling and managing cash, investing in solutions is an excellent way to increase your ROI. By automating your processes, you’ll have machines doing most of the cash handling work, so your employees can leave early, come in later, or be redeployed to more important areas of your business. You don’t need to waste as much time as you do on cash handling—all you need is automation.
Your money should always be safe. If it’s out in plain view, if it’s easily accessed, and if there is no accountability or security, you become vulnerable to internal theft, counterfeit fraud, and robbery. And all of these losses that you might incur are totally avoidable, if you were to invest in the right solutions. There’s no reason to have these losses affect your ROI when there are preventative measures to put in place.
Your employees don’t want to pay for shortages when they make counting errors. They don’t want to be accused of theft if your shrinkage is high. They don’t want to be worried about robbery because your money management processes are lax and unsecure. They don’t want to face angry, impatient customers because the lines are moving slowly due to manual processes. And they don’t want to stay at work later just to reconcile your cash.
All of these things can make your employees unhappy and unsatisfied with their jobs, and in turn, make them seek out other employment opportunities, causing you to have an expensively high turnover rate that will hurt your ROI.
Poorly managed cash can affect your return on investment in many ways. Get a better ROI through cash management solutions.