Minimizing cash handling

Minimizing cash handling        
  
Banking & Finance

Written by George S. Chua / Free Enterprise  

THURSDAY, 15 JULY 2010 21:55

ONE of the more serious problems facing businesses today is the inescapable need to still deal in cash in their normal operations.  Handling and dealing in cash has some inherent problems due to their negotiability which is normally vested on whoever is actually holding on to the cash.  This is the primary reason why criminals target business establishments with substantial amounts of cash within their premises such as banks, gasoline stations, restaurants, money changers, pawnshops, lotto outlets and other retail stores.  Also at risk are the collectors, payroll clerks, cashiers, roving tellers and anyone else involved in the transfer and movement of cash.

If you are still stuffing cash in pay envelopes for your employees every payday, you should change your system into something better.  Think of the manpower needed to do the cash count and payroll processing making sure each pay envelope has the exact amount due to the employee.

There are also a number of risks involved.  First is getting the cash from the bank and of course, once the employees get the cash, their risk of carrying the cash going home.  There could also be errors in cash handling, counting and distribution.

Fortunately, given the advances in technology, it is fairly simple to have a payroll account with practically any bank where the company maintains an account and each employee can have a payroll account tied into an ATM.

What happens here is every pay day, the company simply provides the bank in electronic form and with the appropriate safeguards the list of the employees with their account numbers and their respective pay.  The bank then debits the account of the company and credits the individual employees’ accounts.  There may be some fees or minimum-balance requirements that the bank may impose, but if you count on the savings in terms of hours plus the safety and convenience of all your employees, it will be worth it.

There are also a number of ways to reduce the amount of cash you receive from your customers.  While individual customers may be able to use their credit cards, corporations will not have this flexibility.  You could offer your corporate customers other payment alternatives.

Your both having accounts in the same bank could facilitate payments and reduce the risk for both parties.  The payment from your corporate customer could simply be credited to your account and since the funds are coming from the same bank, there is no clearing.  With electronic banking, you could see this credit online and depending on the bank, you could even see which account it came from, thus enabling you to identify which customer made the payment.

Your customer is also at an advantage since he is sure that the payment is actually made to you and that there has been no diversion which is possible if payment was made in cash or even via check.  The risks associated in making a cash payment is eliminated for both parties.  There is also some savings from the elimination of the use of checks and the payment can be done through electronic banking like a bills payment system, similar to individuals being able to pay for their various utility and credit-card bills using the e-banking facility of their bank. On the flip side, when you are the customer and you need to pay your suppliers, you can make the same arrangements and take advantage of the same convenience.

Other simple cash management techniques to minimize both internal fraud and robbery is by installing a safe with a one-way slot so that the cashier can drop in the cash collections and payments.  This way, there is no cash that can readily be stolen and if the criminals know about this, then the cash register will be less of a target.  Minimizing the distance between the bank and your facility will also be a big help to reduce the security risk.  For example if you were operating inside a mall, using a bank within the mall rather than outside will not only be more convenient, but will also reduce your risk.

Keeping your cash secure in cases when you need to have some within the premises can be helped by having dual control.  Having two separate locks or combinations to the vault or safe with two different custodians will provide an additional layer of security.  Putting remote monitors on sensitive areas and recording it will also serve as a deterrent.  The cost involved is not a lot and will certainly be worth it.

Making all of these changes for the better may seem like a lot of work, but if you take into account the savings in cost, efficiency, manpower and most importantly your safety and that of your employees, how can you afford not to make these changes?

(Comments may be sent to chua.george@yahoo.com)

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