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4 Steps to Performing a Cash Management Cost Analysis

Are you tired of surprise bank fees, service fees, and overpaying for cash management? You’re not the only one. Many retailers are facing similar cash management cost challenges.

Fortunately, a cash management and bank fee cost analysis can help you take control of your retail business's finances. By understanding where your money is going and identifying areas for improvement, you can optimize your cash management processes and reduce unnecessary expenses.

Key Components of a Cash Management Cost Analysis

Fee-Comparison

To perform a thorough cash management cost analysis, you need to focus on several key components:

  1. Fee Identification: Find all the fees associated with your cash management, including transaction fees, cash handling fees, labor costs, and surcharges. This step helps you understand where your money is going.
  2. Categorizing Individual Fees: Determine what each fee is for and which services incur the most costs. This categorization allows you to prioritize areas for cost reduction.
  3. Comparing Volume to Cost: Analyze how much cash you're bringing in versus how much it's costing you to manage it. This comparison helps you assess the efficiency of your cash management processes.
  4. Benchmarking Fees: Compare your fees against industry standards to determine if you're overpaying. Identify areas where changing providers or negotiating better terms could help reduce costs.

 

Common Fees in Retail Cash Management

When performing your analysis, you'll likely encounter several common fees:

  1. Bank Fees: These may include currency and coin collection and orders, check deposits, non-standard deposits, restocking fees, and cash deposit fees.
  2. Next-Day Deposit / Provisional Credit: This is an interest fee charged for next-day credit on cash deposited into a smart safe or recycler. It's usually charged per day until the cash is picked up and processed, typically with a nine-day float.
  3. Courier Costs: This is usually a standard pickup charge plus any fuel surcharges, unscheduled trip fees, excess time charges, and insurance fees.
  4. Labor Costs: This is the time your employees spend counting, preparing, reporting, and transporting cash.
  5. Maintenance and Software: These are the standard maintenance and software support fees plus any out-of-scope costs for your cash management technology. Out-of-scope includes any system crashes, software malfunctions, or equipment issues that do not fall under your regular warranty or maintenance contract.

4 Steps to Perform Your Retail Cash Management Analysis

Follow these four steps to conduct a comprehensive cash management cost analysis:

  1. Gather Information - Collect data from various sources to get a complete picture of your cash management costs. This information should include items such as provider statements from your bank, armored courier, and smart safe or cash recycler vendors. It will also be important to capture employee time logs to understand the total time your employees spend handling and managing cash throughout the day, week, and month. For the most accurate analysis, gather 6-12 months of information
  2. Analyze Costs and Fees - Once you've collected the data, sort the information into categories. This categorization will help you determine what is driving your costs and identify areas for potential savings. There are several good resources available for helping businesses break down costs.

This Cash Management Cost Worksheet is a great FREE resource to get started.

  1. Review Current Contracts and Agreements - Carefully examine your existing contracts and procedures to uncover hidden fees and discrepancies. This review can help you identify how and where your costs are being inflated.
  2. Compare Costs - To determine if you're overpaying for your cash management processes and services, obtain quotes from competitors. This comparison can reveal areas where you might be able to negotiate better terms or switch providers to reduce costs.

Make Your Cash Management Work for You

Understanding the real costs of your retail cash management helps your business make better financial decisions for the future. By gaining insight into your fees and taking action, you can gain control over your cash management expenses and optimize your processes.

Consider exploring innovative solutions like BANK IN A BOX, which offers retail cash management technology and services customized to the retail environment. Cash Depot has designed its cash management services to be all-inclusive. BANK IN A BOX offers complete real-time reporting, reduces employee cash handling, and cuts unnecessary expenses and hidden fees – all while helping your business's cash generate more profit through consumer-facing financial services.

By following these four steps and conducting a thorough cash management cost analysis, you can take control of your retail business's finances, reduce unnecessary expenses, and improve your bottom line. Don't let surprise fees and inefficient processes eat into your profits – take action today to optimize your retail cash management.

Discover how you can make YOUR cash management work for YOU. Find out more about BANK IN A BOX today!