Changing the Cash Management Strategy

Secure Logistics

The cash economy may not be as dominant in our current world as years gone by. Certain segments in the payment’s community are even predicting its demise in the not too distant future. Irrespective of which side of the fence you sit on, there is no doubting that the "Good Old Days" of "Cash is King" is certainly behind us. Despite this fact, the requirement and dependence on some form of physical currency in our society will not be eradicated by alternate payment methods, emerging technologies or cash usage cultural shifts anytime soon.

The industry that facilitates the transportation, management, storage and security of this process is commonly referred to as the Cash industry. With its current heritage commencing in the 19th century, the methodology and processes utilised all those years ago, still bears the hallmark of what is practiced today.

Unfortunately, despite new technological advances, the Cash Management industry has remained relatively unchanged. We currently use legacy systems that have been in place for decades and despite some small changes to procedures, vehicles and training, the same methodologies in place since the 1970’s and 80’s are considered normal business practices today.

Financial Institutions

Financial Institutions are rethinking, evaluating and creating services and new platforms to interact with their customers. Despite some of these new initiatives, a certain number of consumers are utilising alternate platforms and technologies that prioritise digital transactions.

The current cost structure of most banks cannot be sustainable if payments and other business interactions are carried out digitally. Traditional institutions with physical locations have higher operating costs and more overhead compared with digital-first businesses.

The move toward digitalisation is making traditional banks less and less competitive in comparison with those institutions that are investing in technology. This means the landscape is changing for the ways in which companies interact with their banks. As this happens, the move toward digitalisation has and will continue to impact the cash value cycle.

An Alternate Approach

In a world where everything is practically at our fingertips, the stagnation of our industry to adopt change or technology has remained at the forefront of many conversation with industry colleagues.

In my opinion, the Secure Logistics Market has not been able to identify key drivers of decisions, or lack of, that have ultimately contributed to our inability to keep up with ongoing change in trends, emerging technologies and other peripheral services that other industries have embraced and employed.

The global Cash Management industry is a mature market with defined boundaries and company's trying to outperform their competitors by using a plethora of orthodox and unorthodox methods to gain an advantage and increase a greater market share.

Despite this archaic approach proving some success for several CMC’s in the past, the time has come to adopt a more fluid and agile approach to solving some of the inherent issues and pain points currently being experienced by customers across the world. Whilst implementing such a strategy, it will be important not only to consider what the competitors are offering to the market, but rather explore what the market is not been provided and create a platform of bespoke solutions that customers may not even know existed, but will ultimately welcome due to solving a number of inherent issues that may remain unsolved.

The Cash Management Strategy

Understanding the customers’ requirements, followed by identifying their pain points, is more than just information-based systems analysis. The requirement of a comprehensive plan commensurate with the customers own strategy is key to the successful implementation of solutions designed to mitigate or eradicate the pain points identified.

Whilst defining and creating an appropriate Cash Management strategy, an important consideration is when the service provided is at its most cost-effective.

The goal and consideration of any Cash Management strategy is to deliver what the customers want, when they want it and in a manner that does not compromise the safety and security of those directly or indirectly involved with the service. Other considerations may include, but not limited to; laws, regulations, guidelines, costs and other requirements necessary to undertake and deliver the designated service.

Developing the most appropriate and cost-effective Cash Management strategy requires the analysis of four distinct areas within the customers business:

Strategic: By understanding the customers short to long term objectives, the Cash management strategy can then identify and table how it will contribute to the success of those high-level objectives.

Geographical: The Cash Management strategy should identify all geographical considerations that may play an important factor in determining the most appropriate strategy, including; exact locations of current and future customer service points.

Functional: The Cash Management strategy should include procedures and processes the customer and CMC provider will undertake and ultimately be responsible for to achieve functional excellence.

Implementation: The key to developing a successful Cash in Transit strategy is how it is to be implemented across the both companies. The plan for implementation will include development or configuration of an information systems, introduction of new policies, and procedures and the development of a change management and implementation plan.

Creating a Lean Cash Management Strategy

Understanding the effect and criticality that time has on the overall success of the Cash Management strategy is of paramount importance. Assessing and analysing where standardisation is feasible and where customisation is required, is another key factor that will ultimately contribute to the success of the strategy.

Consultation and involvement of key staff members within both organisations will ensure positive buy in and create a culture of openness and transparency that will assist with implementation and ongoing support.

The initial step to implementing a lean Cash Management strategy is to evaluate and measure the effectiveness of the current service landscape. Identifying and creating a path of continuous improvement will also be a critical contributing factor to the overall success.

Value stream mapping (VSM) is a visual tool to define the current state of a company's Cash Management landscape and lay the foundation in determining the future steps required to implement the strategy. Value stream mapping identifies stakeholders, supply chains, time management, critical inventory such as cash and coin requirements and current and future service levels.

With mapping the current Cash Management landscape, we can then draw on the various lean tools to design the future Cash Management and supply chain flow. This future state should include the infrastructure to support it: training, culture, quality methods, accounting systems, and investment policies.