Make Running Out of Cash a Thing of the Past

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Straps of Cash - Emergency Shipments

At one point or another, most customers have probably experienced an ATM that’s out of cash, or had trouble getting the denominations they need when they visit a branch. It’s rare, but it happens from time to time at most branches, and sometimes more often than some would like to admit. Why are branches running out of certain denominations and cannot fulfill demand? How does this shortage impact the branch and its customers? What can branches do to address this? In this blog post, we address the problem of denomination shortfall, its consequences, and possible solutions.

Cash Denomination Shortfalls

Branches do “run out of cash” from time to time. Not literally, though, because it isn’t that the branch has no money at all; it’s just that it runs out of certain denominations sometimes and, consequently, cannot properly serve customer requests for cash at teller counters or ATMs. While denomination shortfalls may happen either occasionally or frequently (depending on how well or how poorly the branch manages its cash), when this happens, it causes operational difficulties for the branch and adds stress to bank staff.

ATM runs out of money due to cash denomination shortfall

Cash Limits May Also Cause Shortfalls

Sometimes, cash shortages may happen due to a common problem with branch branch branch cash management– improperly set cash limits – where the branch manager isn’t at fault but runs out of denominations frequently because s/he might be restricted by a cash limit that is too low to meet the branch’s higher cash demands.

Options, Costs and Consequences When a Branch Runs Out Of Cash

When a branch runs out of cash, it has three options, but each option has its own costs and consequences: 

Options

Costs & Consequences

1. The branch opts to stay out of the exhausted denomination until the next shipment of cash arrives.

The branch’s customers cannot get the cash they need, so they aren’t happy with the branch staff and its parent bank or credit union, and

  • give the branch negative reviews in conversations with friends and on social media (bad publicity)
  • aren’t keen to frequent that branch again, especially if this is a recurring experience
  • consider moving their banking business elsewhere (lost revenue and profits)

2. The branch requests emergency cash shipments from its money supplier, typically through an armored car service.

The branch needs to:

  • take operational steps to order emergency cash (which could involve paperwork, permissions/approvals, and be time consuming, distracting and involve unpleasantness)
  • incur extra cost to have the shipment delivered by armored car (over and above routine Cash-In-Transit contracts)
  • take additional operational steps to intake that money (such as dual controls of counting)

3. The branch requests an emergency shipment of cash from another branch.

When money is transferred from another branch:

  • there’s always security risk involved in moving the cash because inter-branch transfers are:

- almost always done without armored car or armed escort

- with cash often trusted to a teller, to be carried to the requesting branch in an unsecure personal vehicle

  • there are operational steps involved at both branches to transfer the cash, including:

- time spent by the teller (wasted teller time!) in moving the money to the other branch

- Operational steps involved in taking-out and taking-in that money (such as dual controls of counting)

- time spent on following the bank or credit union’s policies and procedures for non-routine inter-branch transfers

 

The Solution – Effective branch cash management

When done correctly, branch branch cash management is an analytical, data-driven process that can boost a Financial Institution’s (FI) profitability and customer satisfaction. If cash isn’t managed properly – with the right policies, procedures, training, and delivery logistics- branches may be unaware of the denominations they hold at various cash points and, therefore, have a hard time keeping the correct amount of each denomination on-hand. And, instead, end up either carrying too much of each denomination (the brute force approach to preventing cash shortfalls) or not enough to service their customers’ needs.

Technology to the Rescue

Banks and credit unions understand the importance of having adequate cash on-hand and the many adverse consequences of running out of cash denominations. So it behooves FIs to make sure branches never face this predicament of cash outage by mastering branch branch branch cash management and understanding each branch’s unique cash flow needs (for each denomination) to put a complete stop to outages and emergency shipments.

Fortunately, with today’s technologies, FIs no longer have to rely on imprecise and unwieldy spreadsheets to track cash at multiple locations within each branch. Instead, banks and credit unions can deploy sophisticated technology-based branch branch branch branch cash management solutions that track cash – by denomination – at each cash point, in real time.

Well-designed branch branch cash management solutions provide:

  • automatic alerts when thresholds are reached for each denomination so the branch’s cash manager can proactively head-off a denomination shortfall
  • on-demand dashboards with a real-time snapshot of cash denominations at every cash point
  • reports on the daily, weekly, monthly and annual history of denomination usage at every cash point
  • business intelligence through the statistical analysis of trends, averages and deviations in denomination usage, and
  • guidance on the recommended amount of cash for each cash point - to cover demand based on historical usage and account for events such as Social Security deposit days, local and national holidays, etc.
 
Today’s software-as-a-service (SaaS) based branch branch branch branch cash management solutions are easy to implement and can make cash shortfalls and denomination outages a thing of the past, while enhancing customer satisfaction, reducing cash outage expenses, increasing transparency and reporting, and boosting the FI’s overall efficiency and profits.
 
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