Why cash handling is important for the retail industry
In the financial services industry, the term "cash handling" is commonplace. Everyone - from the C-suite down to each individual worker - knows the value of quality cash handling and money management. However, in the retail industry, the importance of cash handling can slip through the cracks.
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Jeff Hauser, a marketing executive and retail market expert here at ARCA, shined a light on a few of the reasons why cash handling is so important.
"Cash handling is paramount in the retail industry, particularly as competition and desire to differentiate via customer experience increases," explained Hauser. "Focusing less on payment management and more on customer engagement is critical to developing loyal customer bases."
So then, what can happen with poor cash handling? Here's what to know:
Common problems in retail
By definition, "cash handling" refers to the process of receiving and giving money in a business. In a bank, this includes teller transactions and ATMs, just to name a couple of examples. In retail, cash handling ranges from the point of sale to the behind-the-scenes money management during the day.
"Cash handling improves efficiency and security."
Before we discuss the ins and outs of effective cash handling, it is beneficial to know what can go wrong without it. Three common problems in the retail industry include:
1. Lack of due diligence
One of the most valuable reasons for cash-handling procedures is due diligence. Do you know where your money is at all times? Do you know who has access to it - and where it is headed? With effective cash handling, you'll have these answers. Without it, you could easily encounter problems with bookkeeping, fraud, theft, errors and cash flow, for instance.
2. No paper trail
The second common problem is no paper trail. Cash handling ensures that you know where your cash is and who has access. On the other side, improper systems will make it much harder for you to identify mistakes and rectify errors. This means if you notice a discrepancy in your safe at the end of the day, you won't be able to track it back to the source.
3. Security flaws
The third common problem is one of security. Cash handling, whether policies or technology, can improve security in your business. You'll have greater oversight of your money, including who has access, and this will help prevent fraud, theft and breaches. Without cash handling, your business could be more vulnerable from a financial standpoint.
While these are just three common problems, effective cash handling will have widespread benefits for your business, most coming from the perspective of improved efficiency, security and convenience.
The key elements of cash handling
One of the reasons why cash handling can be a bit daunting in the retail industry is due to scope. These processes impact a wide range of systems and procedures, so it can be difficult to track and manage every minor detail.
Some of the key elements behind cash handling range from:
- Physical cash management - How you receive and distribute cash, where you store it and who has access to it.
- POS systems - The point of sale is critical to effective cash management. Make sure cashiers are well-trained and have total control over their respective drawers.
- Payment tracking - All payments, both physical and digital, need to be tracked, monitored and properly stored.
- Paper trail - All receipts, invoices and other payment-related documents must be accurately processed and filed.
Where you can begin
Understanding the importance of cash handling in the retail industry is an important first step. Moving on from this, you can begin to improve your business from top to bottom.
Naturally, this all starts with an assessment of your current procedures and practices. Analyze your own policies to look for areas of need. Make sure your internal controls are up-to-speed, and that there are no glaring risks in your cash-management process. Above all else, set a tone in your business. Let everyone know that cash handling is a priority moving forward. Once that is done, you can move on to improving your cash handling.