Despite the steady growth of debit or credit card transactions to a high percentage of their daily totals, retailers still must manage cash deliveries and collections for the remainder, other than the small number of items paid for via cheque or purchase
order. That’s what a recent panel of three treasury leaders from leading retailers talked about in a roundtable at the AFP national conference late last month. The subject? “Smart Safe Solutions to Solving Common Cash Management Challenges.”
In a session moderated by Jason Stambaugh, CTP, director of accounts and partnerships for DTS Connex – a deposit solutions and systems vendor - Maggie Kellogg of Starbucks, Kristen Mills of Staples, and Shalia Sarwar of Inspire Brands shared details on their
companies’ respective journeys to solving cash management challenges – in this case using the most strict and accurate definition of the term; meaning management of actual cash receipts in their firms’ hundreds, even thousands of locations across the US.
If you are one of those people who likes to pay with cash, you likely know that your preference is under attack in many corners of the retail universe. Everyone has become accustomed to paying online for products and services. Some retailers, and countries,
especially after the pandemic, are actively discouraging or outright refusing cash payments for goods.
This might lead one to believe that cash is decreasing in retail usage. In fact, that’s not the case. As of the past year’s studies, cash is still increasing in most countries across the globe, according
to one source, and the same goes for
point of sale usage. But it’s not increasing as fast as other payment methods – that's for certain.
This study from FIS shares the current share of each payment method: “Globally, cash accounts for 16% of POS payments, while debit cards are used for 23% , credit cards for 26%, and digital
wallets for 32%.”
In fact, there are whole countries that are discouraging citizens from paying with paper money or change in the name of efficiency and speed –
Sweden, Brazil, India, and Thailand are several examples. Yet, in the US especially, home to stubbornly retained habits such as the increasingly anachronistic practice of writing cheques – especially by businesses - there remains a sizeable share of clients
who enjoy paying their bills for purchases, mostly smaller ones for sure, using notes and coin.
DTS, sells software and systems to automatically transmit information on deposits and cash-on-hand requirements – called change orders - to banks, often using a relatively new tool with various designs and manufacturers called a “Smart Safe” - or more specifically
an intelligent device of this type used for business cash deposits. These machines are designed to remove many of the historical concerns surrounding the acceptance and storage of large sums of retail cash: storefront robbery, insider theft, and providing
secure collection and delivery of cash receipts.
According to an industry provider, Brinks: “While features among smart safes vary, many of them tend to validate bills, record cash amounts, connect to point-of-sale systems, control who has access, and provide information about employee activity. Additionally,
smart safes usually come with more safeguards than traditional safes – many smart safes require an employee PIN, badge, or even biometrics (like fingerprint scanning) for access.”
DTS’s Stambaugh joked that he had heard a banker call firms like his “DoorDash for cash” because they also work with bank and courier partners to supply cash and change needs of many financial institution business customers – many of them outsourced vendors
of the banks themselves.
The topic of the session explored how retail organisations have begun to handle cash requirements amid a decreased need – relative to past years - for these services overall. Meanwhile, costs on a per-unit basis to account for and secure and transport that
cash have risen, though it’s difficult to pin down exactly how much.
Even though in some industries it has become ‘safe’ to simply discontinue cash as a payment option, that’s still a big ‘no-no’ for customers of many retail establishments. This means that companies that still accept cash from customers and transfer those
funds to their financial institution accounts are spending more per dollar collected to handle less frequent pickups and deliveries.
In concert with innovations such as ‘provisional credit’ - which uses electronic reporting of automated and reconciled local cash counts at each location to give temporary credit for deposited funds even before they’ve been picked up and verified at banks’
cash vaults – smart safe technology has helped to substantially change the best practices and procedures for retail branches and stores (in concert with their corporate HQs) over the past decade or so.
No longer do large retailers with scores of locations need to worry quite so much about employees handling or personally depositing cash (or cheques) nor about missing cash or storing bills onsite awaiting periodic pickups by armoured carriers. Instead,
smart safes record deposits immediately into a safe that is not accessible by company staff, then transmit the totals to either a vendor or third-party courier, a bank, or both, to provide temporary credit for the funds deposited.
One interesting fact Stambaugh shared to kick off the discussion is that about 16% of US payments (similar to global figures) are made in cash, while the number of those payments is about seven per household per month. A recent
Federal Reserve study he referenced found that this figure continues to remain stable, albeit much lower than decades ago. It also showed that for purchases that were once sole domain of cash – those under $25 – debit and currency are now tied as preferred
payment methods.
Prominent retailers and restaurants have lots of locations, cash, risks to manage
Mills, senior treasury manager at Staples, described her company’s decision to implement smart safes as pursuing two objectives, to save on labor and courier costs. Their organisation accomplished these goals by eliminating the need for human preparation
of cash deposits and individual verification of those deposits in the company of the courier.
Provisional credits, she said, was another key driver for Staples in their decision, while having a smart safe meant they saved lots of time and lowered security and liability concerns as well. “Once that money is in the safe, no one can touch it anymore [we
said to management team] we get 100% liability off of our plate. “
Kellogg shared a different use case than Mills had from her co-panellist: “We have many of the same priorities, many of the same components of the business case as Staples,” however she said, of utmost importance to them was addressing the company’s culture
and business priorities. “Everything we do at our service support center is oriented around making jobs of all of our store partners as simple and streamlined as possible.”
The global coffee company saw smart safes as an excellent solution to do just that. “By our estimates, they’ve eliminated just under an hour of time savings every day,” she explained, “in terms of eliminating the need to count cash and doing other ancillary
cash management activities in the stores. So, of course, an hour per store per day across our 10,000 stores is really enormous savings.”
Other benefits for the coffee giant mirrored those described by Staples’s Mills. “We're also chasing savings across loss prevention, bank fee savings, in particular with bank adjustment reductions.”
Sarwar senior manager, treasury for came into Inspire Brands, with several well-known restaurant brands including Arby’s, Buffalo Wild Wings, Dunkin, Jimmy John’s, and SONIC among its holdings, after the project had gained some initial traction. “We already
had established models, and a lot of the brands were interested in implementing, or at least having some smart safes, in a more centralised program,” she noted.
They started working immediately to centralise all services across one courier, and providing the technology needed for the targeted restaurants. In Inspire’s case, she says, organising the project was a bit complicated beyond just engaging the restaurant
staff themselves. “You have loss prevention, you have restaurant ops, you have revenue accounting and treasury,” with the latter leading the project, she said.
The treasury team established a monthly task force meeting, with all relevant leaders in the room. “We took a top-down approach, so that we had everyone's buy-in and then moved forward with it. Because you have to establish the return on investment to get
the buy-ins, make sure revenue accounting is happy with how they get information for the reconciliations, as well as loss prevention being satisfied with the information that they get, that they need for whatever tracking they need to do to make sure there's
no anomalies.”
Inspire’s smart safe strategy was successful, Sarwar shared. “We have 98% of our stores on the smart safes and courier service.”
Proving the (customised) case for smarter handling and reporting of cash
Once ROI has been estimated, each of the smart safe programs had to prove their worth in actual operations. For Staples, that came when they were able to reduce their armoured carrier pickups and the treasury group convinced store staff that their cash supply
needs would be fulfilled, said Mills. That’s why when it’s time to choose a smart safe solution and develop a plan to implement and manage the system once selected, Mills says it is critical to make sure your company’s needs are met. And do not give in if
the system or arrangement doesn’t quite fit. “You have to fight for what works for you.”
“We changed our pickups from three to four times a week to once every other week for the stores that went with smart safes. That was our biggest goal,” she explained, but that also created a challenge given each store would have cash and checks onsite for two
weeks, essentially, before it was picked up. "We had to sell them on that piece, especially with coin orders, and that was getting them to see our vision and where we wanted to be with [the smart safe reporting/resupply project.]” With several banking partners,
they also had to do this in a ‘bank-agnostic’ way, and that’s one of the most crucial elements – finding a cash processing provider to support the technology as well as connectivity to multiple financial institutions and courier partners, explained Mills.
Starbucks also required a bank-agnostic solution to meet their goals of complete connectivity to all their local financial institution providers and had other specific needs as well. They found a smart safe that offered dual bill feeders. “With 10,000 locations,
there's just no single bank, bank partner, or armoured courier, that's going to be able to meet all of our needs and cover our footprint.”
The company is rapidly expanding its smart safe program. Kellogg explained that they are in the process of rolling it out to 3,000 locations. “We’re about halfway there and planning to install the rest by the remainder of the calendar year.”
Inspire Brands used a different model, Sarwar said: “We didn't take an agnostic approach. We just focused on having one armoured carrier, because Treasury is responsible in our organisation to manage that relationship.”
Though coordinating with the vendor to execute and maintain such a complex arrangement requires time and effort, Sarwar admits, the company likes the way things are working with the smart safe setup. “We are really happy with our relationship right now.
Because of the model we have it was better for us to just go with the centralised [approach.] Of course, another distinctive feature of our program across all the brands is that we went for a specific smart safe.”
Doing so, she says, “makes it easier for the restaurant team to have the same training manuals and instructions across all of the brands.” For Inspire Brands, Sarwar insists, that centralisation and customisation is necessary, even if it is unusual compared
to some other retail companies.