September 20, 2018

What’s your cost of accepting cash?



When I talk to retailers about their challenges, the cost of accepting cash doesn’t usually top their list of concerns.  Typically, it’s for one of two reasons: either they don’t realize how the cost snowballs based on a wide variety of factors, or they’ve simply decided that there’s nothing they can do about it. Most retailers I speak with aren’t even sure what their cost of cash is in the first place. But in some retail verticals, the cost of cash is higher than the cost of accepting credit.


The cost of accepting cash is affected by the actions of many groups within a retail company, including operations, loss prevention and treasury. Operating in silos, none of these departments might think the costs are an issue. But when you look at all the costs across the business as a whole, you can see how they creep up. Generally, they fall into three buckets: hard costs, labor costs and inefficient reporting.

Hard costs

The fees incurred through your bank and armored car service are a large contributor to your cost of cash. Often these costs begin at the store level because of how your stores are creating deposits or ordering funds. Cross-shipping funds is a common mistake – ordering the same denomination you’ve just deposited because you lack visibility of store cash by denomination and awareness of upcoming cash needs.

My colleague Nathan recently shared a story about a retailer he worked with that, in trying to prevent loss and track accountability, was racking up bank fees by creating separate deposits for each cashier. This practice isn’t efficient or cost-effective, and it’s a great example of how one department can hurt another when they don’t communicate. Giving everyone in your organization access to the same information consistently and regularly helps everyone stay on the same page and act quickly to resolve issues.

Labor costs

A recent IHL study revealed that the average cost of cash across retail is 9.1 percent – a pretty significant number. Despite the wide variety of devices available to speed the counting of cash, there is still a lot of labor that goes into reconciling, accounting for and reporting on cash – due in large part to all the manual procedures at each step in the process.

When is the last time you examined your policies to find out how many manual procedures are part of your currency operations and just how much your cash is handled? Procedures like pickups, loans and starting amounts can all be optimized if you take the time to investigate them and make strategic changes. When you look at your own procedures, keep in mind your:

  • Number of stores
  • Number of registers and self-checkouts per store
  • Average daily cash sales
  • Staffing levels and wages

Inefficient reporting

I’ve been in a lot of retail back offices, and I’ve seen the clipboards, paper reports, fax machines and spreadsheets that are part of the manual processes retailers rely on to get information from stores. Not only are these dated methods time-consuming for stores to complete, they’re a major headache for the corporate employee on the receiving end. Aggregating the reports, calling stores to get missing information, and then examining them to find exceptions and trends is arduous and slow, delaying the information from getting to the people who need it.

And once those delayed reports have put you behind, how much time has elapsed? A week? Three weeks? Even longer? With that kind of delay, it’s often too late to follow up with store staff to find out what happened. They’re paying attention to what’s happening today, not a couple of weeks ago, and in the meantime, the exceptions just keep happening – and costing you money.

Next step

This is just a sampling of how the cost of cash can sneak up on your organization. The Hidden Costs of Accepting Cash eBook offers many more factors to consider as you examine your own operations. And don’t forget – some stores will struggle with cash more than others. It’s important to examine and understand the needs of each location and find a solution that allows you to address each store’s unique needs cost effectively.


The minimum wage is rising sharply in many areas of the country, and you’ll need to find areas in which you can optimize and save. Controlling your cost of cash is a step in the right direction.