Nobody likes to admit that disloyal staff are pilfering money from the company, that counterfeit bills are slipping into the till, or that they are vulnerable to robbery. Gunnebo Global speaks to Bob Turner, a security expert from Sydney, Australia, about the cost of cash and how to maximise the potential for cash handling technology to take these costs out of your business.
Cost of transit
Getting cash out of your customer’s pocket, into your register, and safely to the bank comes at a price.
“There are significant costs along the way, and many retailers don’t see that,” says Bob Turner. “It differs from business to business, but cash is not for free.”
Take a recent example: a chain of petrol service stations in Australia. Each needed several collections by a cash-in-transit (CIT) service every week because errors by cashiers could only be spotted after the final count at the bank, and delaying collections made it even harder to reconcile the takings with the value of sales. With each collection costing around A$100, getting cash to the bank was costing a small fortune.
“By employing technology that could count the cash and immediately reconcile it on the day meant they could extend the collection period to once a week, taking a phenomenal cost out of the business,” Bob says.
So the machines paid for themselves in six months. “Their life expectancy is five to seven years, maybe even longer – so that’s a lot of pure gain.”
Cost of Mistrust
A fundamental feature of cash is lack of trust, Bob says. Retailers don’t trust their staff, who don’t trust the customers, while the CIT company doesn’t trust the retailer, and nobody trusts the bank – a feeling that is often mutual.
“If you sit down with everyone involved in cash you would find everyone has an absence of trust in
others involved in the process. So businesses create costly, labour intensive systems and processes for checking cash as it passes through the company.” Faced by a new machine, it is common to mistrust that as well. But cash handling technology can strip away costly and cumbersome processes, and restore trust.
“Smart businesses can also use the technology to build the confidence of their staff,” Bob says. “The machines give you accuracy, removing a source of
mistrust in a system that is ridden with suspicion, boosting staff morale.”
Cost of staff
It is an obvious point, but if you currently employ someone to count your cash in the store, automating the process removes that cost.
One retail franchisee in Australia, for example, employed two full-time accountants for his 70
outlets and was on the verge of employing a third, which would have required moving to new premises to accommodate the expansion.
By installing cash-handling machines he was able to move the second accountant to part time, while saving on his overheads by staying in the existing office.
Bob gives another example from Singapore, where there is very little theft – one of the main reasons companies invest in cash-handling technology. But the machines are still popular because many businesses rely on unskilled and illiterate labour for customer service tasks. This in turn places a high burden on managers to provide the cash management functions.
“In one cinema, cash-handling technology saved managers four or five hours a day simply by automating the depositing and dispensing of cash, bringing significant advantages.”
Cost of counting
Banks can be suspicious of cash handling technology. In one case, Bob agreed to check the machines with the client by counting millions of dollars both manually and automatically. Together they established an accuracy rate for the machines of 99.99999969% – that’s an error of 1 cent in every $3 million. And the technology has improved since then!
There are systems now that can automate all the functions of the cash office, preparation of floats, provision and delivery of change, to counting back at the end of the business day.
Staff just use a PIN or a fingerprint, and the machine will dispense a pre-defined starting float – when they need more change they deposit the big notes and the machine dispenses coins. At the close of business they simply empty their draw into the machine to be counted and sorted at up to 15 notes per second – just a tiny bit faster than doing it manually.
“The machine should be seen as second pair of eyes, it is replicating the functions of a manager, supervisor or senior cashier,” says Bob.
Cost of Error
When you employ low- or semi-skilled workers, you can run into problems. “It is remarkable how easily $338.30 becomes $383.80 or even $33.83 when data enters your accounting system,” comments Bob. Let’s say you’re a fast-food chain, with employees depositing cash into a safe in envelopes at the end of each day. You have a manager who spends 90 minutes every day reconciling the cash and sales, then taking it down to the nearest bank, which then processes it and informs head office.
At least three parties have entered data somewhere in the system. Every day there is an error. And every error has a cost because it has to be reconciled.
“Sometimes a business can spend days trying to reconcile a simple data entry error,” says Bob. “How much time does it take to reconcile a missing $10? You can spend $200 chasing those $10.”
With an automated cash handling system, notes and coins are counted and validated, the safe itself communicates to the bank, and the bank can place that value on your business account then and there – even though the cash remains on your premises. That level of automation requires a lot of engagement from the bank, Bob points out. Each company has its own specific requirements depending on the relationships it has with the various people that handle the cash as it passes through the business. But each of those relationships incurs a cost, which a machine has the potential to eliminate.
“With different accounting packages, different methodologies and internal processes for handling cash, each business needs a tailored solution,” says Bob.
“But the first step to removing the cost of cash is to understand it – then what might look like a big investment in automation suddenly seems like a very good idea.”
In Summary
Why automated cash handling?
- Cash is continuing to grow worldwide
- Shrinkage is a global phenomenon
- Large gains to be made in operational efficiency
- Being a safe place to work makes recruitment easier
- Modern security systems operate in an open environment
- Technology integrates with POS and back-office
Author: David Crouch – Gunnebo Group