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A store manager is sitting in the back room of the store. "$635, $640, $660, $670," he's counting and reconciling the drop envelopes from the shift that ended a few minutes ago. Piles of fives, tens, twenties and fifties are laid out on a table, all the dead presidents facing the same way. "$680, $685."
There's a knock on the door. From outside a voice yells, "Hey, Tom, we're running low on change. I'm down to six singles and about four fives."
The manager looks up and says, "All right, Max, six ones and four fives, I'll get you more change in a minute." Then he goes back to counting and arranging the bills from the drop envelopes. "$645, $655, $660."
As he finishes and reconciles his total with the total he was supposed to have, he sees he is $40 off. And he must take another 10 minutes to find the mistake. Meanwhile, the register is running out of change.
More is wasted here than time. In this particular drama, it was the manager's mistake, but what happens when it's the cashiers mistake and the finger pointing starts? Sometimes it may be an honest mistake or sometimes it might be outright thievery. And sometimes it's the manager that's doing the thieving.
But perhaps the biggest waste, according to John Douglas, with New York-based Amerada Hess Corp., is the cost of not having the store manager out in the store doing what he or she does best — merchandising the store and dealing with customers.
"The opportunity cost of having a manager's time being spent on the back end of a retail transaction is enormous. Once the sale is completed you have to convert that transaction and get it to work for you as quick as you can," said the operations manager of the 1,073-store chain.
Many retailers have found that the best way to keep managers in the store is to take them out of the cash management process altogether through the use of electronic safes or auto-safes. These safes are equipped with computer chips and bill validators and can track each bill placed in the safe and generate a report at the end of a shift.
As the stores grow larger, presumably sales increase, said Glenn Mason, vice president of marketing and sales with Richmond, Va.-based Brinks Inc. This requires more of the manager's time to count and prepare the deposit. "The chains that have put in electronic cash-counting safes are able to take the manager out of this clerical process so they can spend time managing ever-growing stores. As stores continue to grow and the need for more management attention grows with them, the benefits of electronic safes should become more obvious," he said.
John Angove, vice president of marketing for Wilmington, Del.-based AT Systems Inc., explained, "Instead of depositing the money in envelopes, the cashier can enter a PIN number and feed the bill in to the machine. The safe identifies it, counts it and stacks it into a cassette. At the end of the shift, the auto safe can tell the manager how much money was dropped."
And it can eliminate the finger pointing between the cashier and the manager. The money is in the system and it stays there. At the end of the day the manager can get the totals for the entire day and then check it against the register, he said.
According to Amerada Hess's Douglas, "An electronic safe or an auto-safe takes away all the suspicion and temptation that goes along with handling cash, because now you don't have the cashier making up drop envelopes, or excessive cash in the drawer, and you've made it a little fun for your employees. It takes away double counting. From a risk perspective, it also takes away manager banking."
Manager banking takes mangers out of the store once or twice each day to make a deposit at the bank. "What is the opportunity cost of having the manager count the money and then jump into his car to go make a deposit at the bank down the road?" asked Douglas.
"When you have one carrier they are taking all of the cash to one bank," said Douglas. "They also act as a branch of the Federal Reserve and can get your money back in circulation a lot faster."
In addition, all locations deposit funds into a single consolidated account, as opposed to a different bank account for each location. "If you have stores in three different states," said Douglas, "you may be dealing with four or five different banks, which means that the chain's administrative group is doing direct-deposit account settlements every month for every store, as opposed to getting one electronic file every day from the armored-car company. Every day you know what has been picked up and it's all in one account. The money is already working for you."
Loose Change, Captive Data
While freeing up the manager and consolidating the cash are important aspects of these systems, perhaps the most significant advance is the ability to monitor the data and use the information.
The new safes give retailers the ability to capture information about the amount of cash in each safe on a remote basis, whether from headquarters or from the store manager's house via XML.
XML is the computer format that the National Association of Convenience Stores has made the industry standard as the file format/transport layer for interface between disparate POS and back-office systems.
According to Don Gose, vice president of store operations with Beavercreek, Ohio-based Duncan Oil Co., the XML format allows the 30-store chain to receive both real-time and summary reports.
"With a real-time report, we can log onto the Internet or our wide-area network (WAN) and literally see what our change status is at any store, at any time," said Gose.
"Typically we use it for the day-close report," he said. "On a nightly basis, usually at 2 a.m., we pull the safe data utilizing XML, and it displays the day's report — how many bills we took in and of what denomination. All of the details that we would be able to gather at the site, we are able to pull remotely and we can display on the Internet."
"The safes are miniature PCs," said Douglas. "And the reports they generate allow us to identify the amount of money put in by each cashier, and the currency or denomination of the bills they put in. We use two cassettes in the safes." Douglas explained that retailers still need to have manual drop-in capability for travelers' checks or money orders, but clerks then record the deposit amount using the keypad on the safe.
"We are assigning each safe with an IP address and hanging them off of our network," said Douglas. "Our goal, in the next 12 months, is to have Brinks be able to monitor the amount of cash in each safe and know that we've just had a pickup or an end-of-day close."
By improving the time management of employees and monitoring to the cash in the safe, retailers can better schedule pickups by the armored vehicles. "Our goal is to keep feeding money in and never let the cassettes be filled," he said.
In the back office
The new generation of safes has allowed retailers to keep better tabs on the money coming in and use that cash as capital in a much faster way.
"[Once your receive the data], then you can marry that up to what the manager is reporting. What that means is we're not waiting for the bank statements at the end of the month, or three or four days for the manager mail to review bank deposit slips," said Douglas. "We know every day that the money is either in the safe or it has been picked up and is deposited in the bank. You really improve your back office."
Chains can also pull the POS system using XML, according to Gose.
"If our POS says the cash balance should be Y, based on what was rung up at the cash register, and then the safe says the cash balance is X, the difference is the over /short. We literally have a machine telling us what the amount of our cash over/short, we don't have to worry about somebody giving us misinformation. It is totally independent of people."