Cash Inventory Management Tip #1 – Addressing Customer Demand

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A good inventory system is important to any business’ growth. For most industries, inventory ties up cash figuratively in products sitting on a shelf or in a warehouse. But for financial institutions, branch, ATM, vault and device cash is a financial institution’s inventory.

Like any other business, not enough or too much inventory can be costly to the business and inhibit growth. Today, I’m going to go over how to address customer demand when implementing a cash inventory management system.

Determine branch usage for each cash end point

Determining the actual cash usage in a branch is necessary in implementing a successful inventory management system. I’m not just talking about vault cash. I’m talking about all the places in your branch that cash could be sitting idle.

Here are the common cash end points that may be holding excess cash:

  • Teller drawers
  • Cash Dispensing Machines (CDMs)
  • Recyclers (TCRs)
  • Automated Teller Machines (ATMs)
  • Video/Interactive Teller Machines (PTMs/ITMs)
  • Kiosks
  • Vaults (Branch, central or at a money supplier)

Once you identify all the potential cash end points, look at the usage of each one to make sure you have enough cash in those specific end points to meet customer demand.

Don’t use ‘gut feelings,’ use data

It’s easy to just trust your gut when it comes to cash ordering. Whether your institution’s cash ordering process is centralized or decentralized, gut feelings can only get you so far.

Software can never replace the knowledge and experience of your employees, but it can significantly improve their insight into the actual cash inflow and outflow of the branch and provide accurate recommendations on order and deposit amounts.

Find out the highest usage days

Maybe there’s an annual music festival, maybe it’s every other Friday paydays, or maybe every Christmas is the busiest time for some of your branches. No matter what the reason, there’s always a handful of days every year where more customers than usual come into the branch requesting cash.

Knowing what days throughout the year are your high usage days allows you and your team members to submit accurate money orders without the fear of potentially running out of cash or keeping excess cash around just in case.

Understanding denomination level usage is necessary

Inventory management doesn’t end with a number but dives much deeper. Let’s switch over to an example that everyone may be familiar with at a grocery store before we come back to cash.

ABC Grocery Store knows that it needs 500 cereal boxes to get from this week to next week’s shipment, but do we know how many of each cereal type is needed? It’s not just about knowing you need 500 boxes, but knowing that you need 150 Cheerios, 200 Froot Loops, 50 Frosted Flakes and 100 Apple Jacks to last you between deliveries. Financial institutions need to look at their cash similarly.

Instead of types of cereal, make sure to look at denominations at each location in all the cash endpoints mentioned above. Maybe you have too many $100 bills, but you’re consistently running low on $5 bills.

To implement a successful cash inventory management system accurately, you need to understand the actual denomination usage. This will prevent you from keeping too much, or not enough of a specific denomination around the branch.

If you’d like more helpful inventory management tips, be sure to check out our new two-part webinar series, Cash Smarts, to learn more about how to implement a successful cash inventory system to reduce your excess cash in the branch without the fear of ever running out.