Businesses that accept cash or provide cash as a service often use three common practices when deciding how much cash to order, which denominations to order, and when to order it. These are setting static limits, using tedious emails and spreadsheets, and “gut” feelings and experiences. These outdated practices often harm a financial institution, ISO, or AID’s ability to maintain optimal cash levels to meet demand and lead to excessive cash sitting idly. Everyone can avoid this by investing in cash forecasting software. Cash forecasting refers to making estimations about future customer cash demand and usage by leveraging historical data and current data. Below are five signs your bank or credit union should invest in cash forecasting software.
1. Inaccurate inventory levels and errors
Inventory errors can and do occur. Having too little or too much inventory can be detrimental to day-to-day operations. Ordering too much inventory can significantly increase risk and create a large idle non-interest earning asset. On the other hand, having too little cash means customers are unable to make withdrawals, resulting in a negative impact on customer experience, or requiring costly emergency shipments from your armored car carrier or money supplier. Rectifying inventory errors is also an additional drain on your staff’s time and can pose additional costs or risks to your financial institution.
If you find your financial institution having to consistently rectify inventory errors, then you should invest in cash forecasting software. This ensures that you are ordering cash based on actual cash usage instead of preset numbers or gut feelings.
2. Moving cash unnecessarily to meet basic demand
Financial institutions, ISOs, and AIDs do not often consider the risk or expense associated with unnecessary cash movement around their network. The truth is, this can be a significant red flag that it is time to evaluate their cash ordering. A common example of unnecessary movement is when a branch receives an order from their armored car carrier for $20 dollar bills, and then turns around and deposits $20 dollar bills (cross-shipping.) Additionally, interbranch transfers may occur because a location may think they are low in a denomination, but it could be because it is simply low for that location’s comfort level, not because they are actually too low.
Financial institutions that make unnecessary orders and deposits keep cash on the move and difficult to track. Cash forecasting software eliminates unnecessary movement by providing visibility into each location’s cash points down to the exact denomination so there is no need to sporadically order or cross-ship. Leadership can then take time to review their armored car delivery and pick-up schedule to ensure they are not overpaying and are minimizing fulfillment costs.
3. Inefficient communication within your financial institutions or company
When people think about inefficient communication within an organization, they automatically think about delays between emails, phone calls, etc., but what is the true cost of inefficient communication? Inefficient communication can have many detrimental effects on your financial institution’s overall efficiency which wastes time and money. For example, something as simple as a branch or ATM/ITM staff member missing cash order time deadlines results in extra communication steps with the money supplier and the armored car carrier, and expensive emergency shipment costs.
One of the many ways cash forecasting software can help is by providing a centralized portal that allows you to communicate and receive important information about your cash in one location. Software like logicpath’s C3 Financial allows users to view all branches in one centralized dashboard and can simply order cash for every single location with the click of a button, eliminating the back-and-forth erroneous communication.
4. Consistent cash delivery delays
Delays in your financial institution can come in many forms and are sometimes inevitable. Cash orders can be delayed by an unexpected transportation change or because a holiday falls on a scheduled delivery day. In addition, there are other delays that can be caused when a location does not place its cash order on time. Financial institutions and companies need to be thinking in terms of days of cash-on-hand based on actual usage for that time period. If there is a location that’s susceptible to snowstorms with a service schedule of every seven days, then it might be worth keeping nine days’ worth of cash on hand. However, during the summertime, the same location may only need six or seven days of cash on hand instead. Cash forecasting software can help you prepare for these types of delays by easily changing the cash order forecast during specific times of the year.
5. Misuse of resources
Does your staff use antiquated processes such as email and spreadsheets to manually calculate orders and deposits, as well as communicate that information internally? Additionally, money suppliers and armored car carriers have their own online systems where staff is required to manually ten-key type their orders and deposits. This waste of time and resources can be highly interruptive to the efficiency of your customer service model because your staff is performing administrative work as opposed to high-value tasks such as supporting and selling to your customers. If this is the case, a cash forecasting cloud software solution can offer a significant amount of automation that will allow your team members to focus on customers and members instead of wasting time on manual cash processes.
Proper cash forecasting software gives valuable information about their potential cash demand across all their locations down to the denomination so that managers can make informed decisions around cash and make sure cash stock levels remain at an optimal level. Without cash forecasting software, financial institutions risk making poor decisions about their cash inventory.