Inventory management can sound intimidating, however, having a good inventory management system in place is vital to the success of any business. When it comes to banks and credit unions, there are many variables that come into play when understanding cash inventory. How much needs to be ordered? How much cash is in transit? Do you have the correct denominations to satisfy customer requests?
Here are four top inventory management factors you should consider for your financial institution’s cash:
1. Adopt an interconnected inventory software system with real-time analytics
In working with hundreds of banks, our consultants are frequently told a difficult part of a cash inventory and ordering process is that staff have their own ways of doing things, based on experience or best-guess. It’s not uncommon for every branch to order cash differently, and to order and conserve too much cash.
When looking for a good software solution, it will remove the guess work and streamline the cash ordering process. It should deliver analytics about how much of each denomination is located at the branch, the inflow and outflow of cash at the various end points, as well as report end-of-day balances integrated from the teller platform.
Employing a cash inventory software allows you to be proactive in ordering the correct amount of cash. It also ensures the applicable personnel within the FI is aware of the cash amounts at each branch, so they can manage cash levels and convert excess cash into profitability.
2. Accurate forecasting
An inventory system understands the patterns of demand for your product. There are many variables to take into consideration for banks and credit unions: how cash demand is unique at each branch and changes throughout the year, understanding the denominations you need on-hand to meet customer requests, and delivery schedules that may include long lead times.
Forecasting inventory demand is another feature that can be completed by a software system. A system provides recommended cash amounts, by denomination, for each cash point based on historical usage and delivery constraints. It also uses statistical analysis of trends, averages and deviations in denomination usage, to forecast for events such as national holidays, and annual community events where cash demand is historically higher.
3. Cultivate internal lines of communication
An often overlooked piece of inventory management is having easy and uniform lines of communication with internal and external partners. As mentioned earlier, each branch may have their own way of managing cash, including how the branch communicates cash orders and deposits.
Ensure communication is consistent and trackable with branches in your network through an inventory management software. Encompassing communication and cash requisitions in a cash systems keeps inventory reports accurate and up-to-date.
4. Plan for the future
Having an accurate forecasting system, internal communication process, and a helpful software system allows financial institutions to be adequately prepared to have the right amount of cash on-hand to meet customer demand at the right time, without tying up additional cash.
By assessing your inventory management process for your cash, you will increase your profitability all while increasing customer satisfaction. Talk about a win-win.