Although your establishment likely offers electronic means of payment, like debit and credit, you probably also accept cash. No matter how digital our world becomes, cash will always be used. Though you might dislike the credit card fees you have to pay, you might not realize that accepting cash is actually more expensive for your company. And the more money you have coming in every day, the more money cash handling will cost you.
Have you really considered how much money you spend directly and indirectly on cash management? You might be aware of some of the costs, like buying wrappers and bill straps, but there’s so much more you need to factor in to get the true cost of cash handling.
Calculate Your Cost of Cash
If you want to reduce your spend and save money on the cash management process, you need to break down your expenses and truly understand where your money is going when you manage and handle cash. Only then will you be able to put effective measures in place to increase efficiency and reduce costs.
Utilizing a free cost of cash calculator is the best way to increase the visibility in this category of spend. Your business is unique, and you will have different expenses, risks, and challenges when it comes to cash management. A cost of cash calculator can help you understand exactly where you’re spending money, so you can be proactive in your search for solutions.
Typical Costs Associated with Cash Handling
The calculator will look at all of the typical areas that make up your total spend in this category. It can help you become aware of many expenses that you might not even realize that you had, and others that you didn’t realize were so costly.
Some of the factors include the labour costs associated with your managers, cashiers, cash room attendants, and head office personnel as well as cash handling activities like safe counting and balancing, float preparation and verification, change requests, cash pulls, reconciliations, deposit preparation, and banking. It will also include head office activities such as cash audits, bank reconciliation, and discrepancy investigations, and the monthly costs associated with equipment and ancillary, like lease payments, armoured cars, repair and maintenance, deposit envelopes, bags, and coin wrappers.
If your cash management processes aren’t secure, if they provide no accountability, and if they’re lax and unorganized, you’re going to be spending more on labour costs and other expenses. This will also put you at risk of cash handling losses. One of the most significant losses that you can incur is human error. When your cash management processes are largely manual in nature and you do not have strict procedures in place, you could end up losing a lot of money to miscalculations, misreporting, and misplacement of money. In addition, you could be dealing with a high shrink rate as your employees could steal from you while processing transactions, counting floats, or reconciling at the end of the night. You could also lose out on hard-earned cash due to counterfeit fraud. And you could also be vulnerable to robbery as well. These losses can add up to a significant sum that will affect your bottom line.
Get a Handle on Your Cash Management
Though you will always have to pay some expenses associated with cash management, many of the costs are avoidable and can be reduced with cash management solutions. Once you understand what your risks are and where you’re spending too much money on cash handling, you can invest in cash management solutions, such as cash recyclers, cash counters and sorters, and counterfeit detectors to increase efficiency and productivity, and in turn, reduce the amount of money you’re spending on cash handling activities, labour, and losses.