Cash Handling Expenses Can Top 15 Percent and 500+ Labor Hours as Inefficiencies Permeate
Complex front-end and back-end cash handling processes create an average cost nearing 10 percent across a variety of retail segments, a recent report from IHL Group found. These processes can also cost retailers over 500 labor hours a month per store, according to the report.
The average cost of cash across all retail segments is 9.1 percent, the report found, with costs reaching as high as 15.5 percent for bars and restaurants and 12.9 percent for specialty soft goods retailers. While grocery retails are the most efficient at accepting and handling cash, costs still average 4.7 percent, the report said.
Inefficient cash handling processes also cost valuable labor hours that could be spent providing products and services that make retailers more competitive, the report said. At warehouse clubs and supercenter retailers, for example, cash handling costs on average 1,122.4 hours per month per store.
“Although the percentage of cash transactions has been reduced over the years, the processes for handling cash have largely remained the same,” said Greg Buzek, president of IHL Group, in a release. “Most often, retailers task the most expensive employees in the store to count and transport cash, which means these employees are not available for other, more profitable customer-facing transactions.”
Automation of cash reporting, advanced analytics and deposit reconciliation/optimization can help reduce cash handling costs, the report said.
“Much has been made about the cost of credit and debit transactions,” said Buzek. “But the real cost of cash ranges from 4.7% to over 15% for some retail segments. These costs are often hidden as they are part of a manager or supervisor’s job rather than their complete focus. Yet optimizing these processes through targeted automation can provide hundreds of labor hours per month to stores to improve the overall customer experience.”
The study was conducted independently by IHL Group and was underwritten by Fujitsu, Glory, Balance Innovations and APG Cash Drawer. Read more about the methodology and download the full report here.