Smart Tips – Managing Your Cash Supply Chain and Inventory - #6 Define Delivery Schedules


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One of the costliest areas in cash supply chain management for a bank or credit union is the expense associated with cash deposit and deliveries. In this blog post, we will be reccomending best practices that financial institutions should use to define their delivery schedules appropriately to optimize the cash supply chain and reduce deposit, delivery and holding costs.

Calculate the cost to deliver

There are two different areas banks should consider when evaluating cost to deliver and ship. First, you should look at the armored car delivery and shipping expense for each transportation of currency as well as the cost for emergency shipments if you are prone to ordering them often. The other area to consider are the costs associated with staff such as counting cash manually or filling on-site ATMs.

Determine the cash to hold

Holding costs are the cost of storing inventory that remains unused or unsold. In the case of financial institutions, we are talking about cash. When you are holding excess cash in your branches and ATMs, it sits there idly as your largest non-earning asset. Excess currency in a branch or ATM could also be re-invested into more profitable areas such as the Federal Reserve or a loan.

Adjust a delivery schedule to best fit your branch/ATMs

Much like cash demand fluctuates per location per denomination delivery schedules shouldn’t be the same for every branch and ATM. Each location has individual needs and should be treated as such. Branches with high-traffic and cash demand might need deliveries two times a week, while branches in more rural areas might only need one every other week. Optimizing delivery schedules will provide significant cost savings that ensure you are not overpaying for deliveries that create excess cash inventory, as well as not having to order costly emergency shipments.

Don’t order cash based on old habits

In a previous blog, we discussed how the old ways of ordering cash won’t work anymore. Make sure you are ordering cash based on actual cash demand and usage down to the denomination. An industry best practice is to use a cash management forecasting software such as C3 Financial to help determine actual cash demand.

To learn about more Smart Tips for managing your cash supply chain and inventory make sure to download our webinar, “Cash Smarts – Part 2.” Click below to download the webinar and continue to check out more Smart Tips on our blog.

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