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Cash Office Technology: Time to Consider the Business Case

The national living wage ignites the business case for cash office automation but retailers need to be wary of overpriced solutions.

Automated cash counting safes have been around a long time but UK retailers have been slow on the uptake.

The allure of improved productivity is obvious but high costs, poor execution and a failure to replicate solutions that have been successful in other countries has meant limited take up. All this is now changing and the time is right for retailers to take another look at cash automation.

The national living wage will be a major factor in rising cash office costs. These are set to rise by an average of 30% for retailers over the next five years and the case for automation of cash processes has never been starker.

Credit and debit cards are seeing dramatic price reductions due to European legislation and significant growth at lower value transactions through the use of contactless technology. Meanwhile cash, with so much manual processing required, will experience a huge increase in costs. Worse, many of these processes are fixed, meaning that falling cash takings will not mean corresponding cost reductions. Cash transactions are falling in value across the retail landscape and hence cost per £ processed and banked is therefore rising.

In such circumstances, is it time to consider automated solutions?

Many retailers have considered solutions in the past and rejected them. And no wonder, as there have been a number of problems. Firstly the technology wasn’t as robust or flexible as it should have been. Secondly, the costs of the solutions were too high and thirdly – and possibly most importantly - closed loop solutions involving hardware, software, MI, cash in transit, cash processing and quick value, were just not available. For these reasons, cash office projects ended up rejecting technology and opted for alternative solutions, such as outsourcing.

Thankfully, times have changed and a number of retailers are using this technology successfully. As is always the case with new technology, over time, prices have declined whilst quality has increased. New closed loop solutions offer lower cost options and quicker value. However, some retailers are still falling into three pitfalls:

1. Failing to find a “best fit” solution

2. Paying too much

3. Poor implementation

All three are avoidable. A thorough procurement process will seek out suppliers who understand your needs and can adapt solutions to your bespoke requirements. A complete understanding of the costs and capabilities of each element of the preferred solution is essential. Getting this procurement process right obviously helps solve the second pitfall - paying too much. You must grasp each element of the supply chain to avoid this and also ensure that you don’t ending up over investing in kit and services you don’t need. Of all three pitfalls, perhaps the most soul destroying is poor implementation. This is a significant operational change for your estate and you will be effectively outsourcing the counting of cash to a third party service provider and, of course, some are better than others.

The rewards from the right solution are manifest. Not only will you achieve significant bottom line cost savings, but you may also experience significant improvements in productivity to more than offset the impact of labour cost increases. Better still, many retailers have been able to divert employees away from cash processing tasks to higher value-add and customer facing roles. Other improvements can include better reconciliation, lower losses and improved cash flow. Indeed, same day value for cash deposits on-site can produce a permanent balance sheet improvement.

The time is now right for UK retailers to follow the path of peers in other economies and drive significant efficiency through automation of cash processes. The cash supply chain, banks, CIT companies and cash processors are rising to this challenge with innovative solutions that will drive down costs and improve productivity. The result will be a material improvement in profitability.

Retailers need to grasp the opportunity.

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