When your day-to-day priorities involve optimizing cash flow, reducing costs, and managing risks to increase your bottom line and improve your profits, the way you handle cash probably doesn’t even cross your mind. After all, as CFO, you have more important responsibilities to deal with. You aren’t even worried about your cash management processes. And really, how much could handling cash really be costing you? There’s probably nothing you can do about the situation even if you were to realize that you’re wasting time and money on the process, anyway.
We’re here to tell you that handling cash absolutely costs you more than you think—especially if you’ve never actually determined all of the costly factors that go into the process. But the good news is that there is something you can do to reduce your costs and reduce your risks. And when you prioritize cash management improvements, you’ll be able to improve upon the rest of your responsibilities, too—you’ll be able to reduce costs, save money, and even increase liquidity, so it’s a win-win.
Below, we’ve detailed what you actually spend money on so you can better gauge how much you’re spending on handling cash.
The direct expenses are probably the only costs that you really are aware of. These include the costs of supplies, like bill straps, coin wrappers, deposit envelopes, armoured car pickups and your vault. You see these expenses in the form of monthly invoices. Unfortunately, because the other costs of handling cash are more hidden, you might think that these direct expenses are the only ones you actually have. But the cost is significantly higher.
Your labour costs are probably lumped into one big number—you only look at the big picture. You don’t pick apart exactly how many hours are going to which activities. Because, really, it doesn’t matter, does it? Yes, actually, it does. When you increase visibility and break down your costs, you can then start to put solutions in place to reduce the amount of money you spend on your workforce.
You might not realize how much handling cash is costing you in terms of labour—but it’s actually significant. Think about it. You need someone to spend time on creating floats, on processing customer transactions, on counting and sorting money at the end of the day, on reporting your totals, on vault transactions, and even on storing and depositing your money. If you work for a mid-sized retail store, you’re likely spending at least 15 hours a day on these tasks. And if you work for a bigger company that handles larger volumes of cash, you can double the hours.
Now translate that into a dollar amount and you’ll see that you’re wasting tens of thousands of dollars in labour every year.
You might just accept shrinkage as part of doing business—every company will lose out due to human error, internal theft, and customer theft. Especially if you’re in retail, the amount of money you are losing because of these criminal activities can really hurt your bottom line. The average shrink rate in Canada for retailers is 1.42%, which results in a total of approximately $4 billion a year in losses.
When your employees handle and manage your cash without proper procedures, without the help of automation, and without accountability, you are letting your business become vulnerable to counterfeit fraud. You are giving your employees and customers opportunities to help themselves to your cash. You are increasing your risk of human error. The losses you suffer could be significant.
Now that you realize handling cash is costing you more than you think, you can start to prioritize cash management improvement. Introduce cash management solutions and reduce your costs.