May 11, 2017
Cash and emergencies: How retailers can prepare
The majority of U.S. consumers continue to carry cash with them day to day, and your stores are working to mitigate the costs of accepting that cash under normal circumstances. But one of the most practical consumer cash habits that often goes overlooked is that of keeping a more substantial amount squirreled away in an easily-accessible location. If a natural disaster or other emergency were to disrupt power or telecommunications and render electronic transactions impossible, cash would be crucial.
Hiding some money at home seems to go against a lot of what’s taught in financial literacy courses, but it’s far from the paranoid habit of a doomsday prepper. Take it from Amy Goodman, vice president in charge of cash services and New Orleans branch manager at the Federal Reserve Bank of Atlanta, who has experienced one of these devastating disasters firsthand. After Hurricane Katrina, “cash truly saved the day,” she says. “Since card transactions could not be processed, currency was the only means by which people purchased everything from food and medicine to household supplies to begin the cleanup process.”
The Centers for Disease Control and Protection includes extra cash on its list of things to pack in an emergency supply kit. The Department of Homeland Security stresses the importance of having “small bills on hand because ATMs and credit cards may not work during a disaster when you need to purchase necessary supplies, fuel or food.”
“Whether it’s Mother Nature or some other disaster out of your control, you always want to be prepared by having some emergency cash on hand,” says Annalee Leonard, an investment advisor representative and president of Mainstay Financial Group. “Banks and ATMs may not be up and running for days after a strong storm. I recommend my clients have three to five days’ worth of spending money, just in case.”
Financial reporter Paul Sisolak suggests five places to hide an emergency cash stash at home:
- Inside false infrastructure like a fake power outlet, drain pipe or air vent.
- Buried outside wrapped in plastic or in a glass jar, somewhere conspicuous in the yard or garden.
- Disguised and dispersed, with a few bills hidden among everyday places like books, envelopes, and inside a curtain rod.
- Inside a water-tight container in a fish tank or outdoor fish pond
- In a safe that’s bolted to the floor or heavy enough to deter theft.
So how does the concept of saving cash for an emergency apply to retailers? Of course you’re prepared to accept cash in all situations, but what happens if your currency management systems are down along with the rest of the local electrical grid? How will you handle receiving an influx of cash for a limited time? If your card processing system is functioning, does your cash-on-hand policy allow for customers to request cash back on debit transactions, and will you be prepared to meet an exponentially increased cash demand? How about if your customers come to you needing cash and want to write a check for over their transaction amount – do you have policies in place that allow it in emergency circumstances?
It’s always a good idea to revisit and examine your cash policies to prepare for any circumstance. When an emergency or natural disaster occurs, your stores will be ready to handle issues that arise, even under stress.