Proof of Return on Cash Management Solutions

Short Drawers and Sticky Fingers
How Cash Control Curbs Losses

As seen in the 4/21/11 edition of the Retail Solutions Online newsletter — www.retailsolutionsonline.com.

At first blush, the implementation of a cash management solution might not seem a likely path to quick and significant return, but a closer look reveals real and measurable ROI opportunity that might surprise you. The first step toward determining how much return you might expect from a cash management solution is to analyze your needs. At Tellermate, we perform a 13-point store operations needs analysis, which audits:

POS Starting Funds
POS Reconcile
Rebuild POS Starting Fund
POS Loans or Exchanges
POS Pick Ups and/or Drops
POS Drop Consolidation
Deposits
Safe or Vault Audits
Change Orders
Data Entry
Discrepancies & Fees
Variations
Spot Audits

These specific operations are tallied under one of four general headers that we use to categorize potential return: hard labor savings, management labor savings, hard expense recovery and potential expense recovery. On average, by implementing a cash management solution where none existed, a retailer can expect to gain one hour of “hard labor savings” per day and win back two dollars per day in “hard expense recovery.” These two measurements alone result in a typical ROI of less than six months. Many retailers have seen a return in less than three months.

CASH MANAGEMENT CAN’T MAKE MONEY … OR CAN IT?

Counting and auditing cash doesn’t bring in sales, doesn’t build your brand standing, and doesn’t improve your customer’s satisfaction with your stores and products. It’s strictly a necessary overhead function of the retail business. That’s exactly why minimizing the time and labor required to manage cash is a commonly acknowledged advantage of cash management solution adoption. When the aforementioned hard labor savings is reallocated strategically to drive sales-side activity like promotions, customer assistance, and development of associates, that small per-store investment in cash management pays immeasurable dividends.
Some retailers make the false assumption that they don’t take in enough cash to justify the investment in a cash management solution. But the investment is not great – it includes the purchase of the hardware and software application, a minor amount of integration, and about four hours of labor for training. These are accounted for in the average return figures mentioned earlier. What’s more, the crux of our ROI model doesn’t rest on the volume of cash you manage; it rests on the management time automation saves you. Our needs analysis includes a great deal of detailed focus on the amount and cost of the time retailers spend managing cash. Where we can show a quantifiable reduction in that time, we can also show a significant opportunity for monetary gain.

STANDARDIZATION, COMPLIANCE BENEFITS

Standardization and procedural compliance ensure immediate operational improvements. Manual tasks, such as hand counting money, leave too much room for efficiency- and accuracy-crippling variables. The application of a technology that directs everyone through the process the same way instantly assures standardization and compliance to procedures. Tellermate cash management technology also produces standardized reporting on the “who, when, and how much” of cash handling. As opposed to manual attempts to record cash activity and movement, automated and electronic record keeping and auditing are easily retrievable, legible, and traceable. Finally, the ability to perform random spot audits without bringing down the register for 10 minutes is a highly valued operational and loss prevention-endorsed advantage. Many retailers have spot check policies in place to thwart employee theft, but fail to perform them for fear of taking a register out of service during a shift. Tellermate technology enables spot audits to be conducted randomly, on-demand and in under a minute, maintaining the element of surprise that LP professionals know is so vital to the efficacy of a spot check program. Operational improvements such as these contribute to the aforementioned “potential expense recovery” by leading to long term reductions in:

—Training costs due to standardization and compliance

—Audit costs due to the ease and availability of information

—Employee theft due to the effectiveness of spot audits.

In fact, some retailers have justified the technology investment solely on the effectiveness of the spot audit function at reducing employee theft. That said, we don’t consider these long-term factors in the initial ROI analysis, because to track them requires a long-term comparative period analysis. We know that most retailers will see a return on their investment in less than six months based on time savings alone, but we also encourage them to conduct their own long-term evaluation of the technology to appreciate the ongoing benefits of cash management automation.

ABOUT THE AUTHOR
Bob Brown is a Regional Manager for Tellermate. Tellermate Group is a leading provider of cash management solutions in retail, banking, QSR, and leisure. Tellermate is trading with a global footprint with its headquarters in Newport, Wales.