If you operate a retail business, you're likely no stranger to the challenges of managing cash. Keeping large sums of money sitting in a back-office safe may seem like the safest option. That cash sitting idle isn't doing anything to improve your cash flow or retail business investments. It may even be creating a security risk – putting your business at greater risk for criminal activity.
The better solution is to get that money into the bank as quickly as possible. But physically transporting cash to the bank, either by having a manager make daily runs or scheduling armored carrier pickups can be costly – in both labor expenses and armored service charges. That's where smart safes and cash recyclers come in with their next-day deposit options. But this feature might not be all it's cracked up to be.
The Promise of Next-Day Deposits
Most businesses that have adopted smart safe or cash recycler programs have also taken advantage of the next-day bank deposit feature. This allows any money deposited into the smart safe or cash recycler to be credited to the business's bank account the very next day - even though the physical cash is still sitting in the back office.
This next-day deposit feature seems like a win-win – your cash already working for your business without the additional hassle and expense of armored carrier or bank runs. But there are some surprising facts you need to know about next-day smart safe deposits.
Next-Day Deposits ARE Provisional Credit
A quick internet search for “provisional credit” will tell you it is a temporary credit provided by a bank or credit card company. Most search results will note provisional credit is used for disputed transactions as claims are investigated. But provisional credit isn’t just for consumers, banks often provide provisional credit to businesses to cover funds that have been reliably recorded before it is physically deposited into the bank. Sound familiar? It should.
The “next-day deposits” provided by smart safe and cash recycling programs are a form of provisional credit – one that essentially functions as a short-term loan until the physical cash is deposited and processed through the system. But, like the little annoying fees on your cell phone bill, most safe and recycler programs either don’t call out “provisional credit” on statements or bury it in the line items of their monthly invoicing.
Unlike consumer provisional credit which is typically used as a placeholder during fraud investigations, provisional credit for smart safe and cash recycler programs incurs interest fees. And these fees are usually charged daily until the credited funds are finally settled with the bank.
Next-Day Deposits Aren't as Affordable as They Used to Be
Like every interest-based program, rates for next-day deposits / provisional credit have risen significantly in the last couple of years. Before 2020, provisional credit rates were quite low - a business depositing $13,715 per week in 2014 might have only paid around $48 in next-day credit charges or around $2,500 per year.
However, as interest rates have risen in recent years, those provisional credit fees have skyrocketed. That same $13,715 weekly deposit in 2023 could now incur $127 or more per week, or around $6,600 per year, in provisional credit charges.
Finding Ways to Reduce Costs
If these rising provisional credit fees have you rethinking your retail location’s use of next-day smart safe or cash recycler deposits, you do have a few options to reduce those costs:
- Go back to waiting for cash to clear with the bank. The simplest solution is to forego next-day deposits and just make regular cash drops at the bank.
- Offload cash through your store ATM. Retailers who fill their on-site ATMs with store cash can have those ATM transaction funds directly deposited into their bank account without incurring provisional credit fees. Unfortunately, most retail ATMs only dispense $20s, significantly limiting the amount of money a convenience store, grocery store, or other retailer can cycle out through the machine.
- Utilize the BANK IN A BOX cash management system. BANK IN A BOX combines the benefits of a cash recycler with an ATM and financial kiosk, allowing you to deposit all of your store cash (except those weird $2 bills) into the machine.
Just like a standard cash recycler, the money is tallied and recorded. However, while the money is then recycled for use for store change and register funds, it is also used to deliver ATM and other customer-facing financial transactions. Money cycled out to consumers is delivered to the store’s bank account without incurring provisional credit fees – providing all of the benefits of a store cash recycler while significantly reducing overall cash management costs.
Don't Get Blindsided by Hidden Fees
The takeaway here is that next-day smart safe deposits aren't as straightforward or affordable as they may initially seem. Those provisional credit fees can really add up, cutting into your profits if you're not careful.
Be sure to do your research, understand the true costs involved, and explore alternative solutions that can help you efficiently manage your cash without getting hit with surprise fees. Your bottom line will thank you.
TLDR: That "Next-Day Deposit" feature provided by most smart safe and cash recycling programs is really a provisional credit - complete with interest charges that could be quietly hitting your bottom line. Fortunately, there are ways (like BANK IN A BOX) to reduce or eliminate those fees and still enjoy next-day cash.
