Your business might offer electronic means of payment, and you probably grumble silently at yourself about the debit and credit fees that you have to pay to offer these convenient payment options to your customers. But you’d probably be surprised to hear that it actually costs you more to accept cash than debit and credit. The cost is just hidden—and often a mystery to CFOs.
If you took the time to categorize and tally up all of the costs of handling cash, you might realize that it actually affects your bottom line—often significantly. And you might be more inclined to invest in cash management solutions once you better understand your total spend on cash handling.
Just consider these cash management costs.
Equipment and Supplies
You can probably take a guess at how much you spend on cash management equipment and supplies on a monthly basis. After all, these costs are direct and you see the invoices. Your armoured car fees, lease payments, cash room vault, repairs and maintenance, deposit envelopes and bags, and coin wrappers and bill straps account for some of the money that you’re spending to handle and manage cash at your business. But there’s more.
Average retailers spend approximately 15 hours a day on cash handling activities. That’s over 5,000 hours a year! Even if you pay your workers minimum wage, this could still come up to over $60,000 a year that you’re spending on tasks like float preparation, currency sorting, bank reconciliations, deposit preparation, banking, and cash pulls. And larger retailers spend even more on the labour associated with cash handling. Clearly, this kind of money will affect your bottom line.
Cutting those hours every day can make a real difference in your profits. By automating your processes with cash management solutions, such as currency sorters, coin counters, and cash recyclers, you can significantly reduce the amount of money that you spend on cash handling. When you let the machines handle the time-consuming work, you can send your employees home early, so you can save.
Internal Theft and Losses
When totalling the amount of money you spend on cash handling, you have to consider how much money you lose on internal theft and losses due to human error and administrative mistakes as well. If you have no accountability and lax cash management procedures, then your shrink rate is likely higher than it should be. When your money isn’t properly tracked and accounted for, dishonest employees will take advantage. Shrinkage can ruin your business, but it doesn’t have to.
Moreover, if you’re largely handling your cash manually, without automated machines, then you’re probably losing out due to innocent errors caused by distracted, rushed, or stressed-out employees.
Though you might think that shrink and human error losses are inevitable and unavoidable, you’d be wrong. You don’t just have to accept them as a part of doing business. You can fight back with cash management solutions. When you use machines to count, sort, reconcile, and report your cash, you’ll not only increase accountability, but you’ll also increase accuracy. You’ll be able to improve your bottom line by eliminating avoidable losses.
Turn Things Around
Now that you have a better understanding of your cash management spend, you probably want to do something about it. The numbers might be shocking at first, but it’s no surprise that cash handling is negatively affecting your bottom line if you haven’t integrated cash management technology into your establishment yet.
Instead of losing so much money on avoidable losses, internal theft, and high labour costs, you can invest in cash management solutions to increase productivity and efficiency, and in turn, reduce your spend. Cash management solutions provide a high return on investment, can make you leaner and meaner, and can give you a competitive edge.