8 Tips for Managing your Cash Supply Chain and Inventory

Credit unions and other financial institutions have some of the most intricate supply chain systems in the world, specifically the cash supply chain. Below are eight tips to help you assess and optimize your cash supply chain and vault, ATM and device inventory processes, so you can create more visibility, refine procedures, and keep your cash supply chain moving efficiently.

Address member demand

• Determine your branch’s usage for each cash point in a branch including teller drawers, ATMs/ITMs, devices and vaults
• Use data instead of “gut feelings”
• Find out highest usage days
• Having denomination level usage is necessary
• Be aware of trends

Discover the patterns of cash usage at your branch

• Know what holidays and events affect each branch or ATM
• Calculate weekly outflows, such as paydays
• Calculate monthly outflows, such as Social Security
• Prepare for seasonality, such as ballpark or stadium ATMs

Expect the unexpected

• Be able to respond to new daily cash usage information and an uptick in demand
• Have a process in place to switch to centralized ordering as necessary
• Establish a way to quickly communicate with critical suppliers and order another shipment, if necessary. This includes offsite ATMs and ITMs that are regularly serviced by your armored car carrier, or branches where the lobby is closed

Create a target or limit

• Plot usage and discover your branch or ATM’s cash trends
• Don’t use the status quo – just because the limit has been $500,000 in the past doesn’t mean that is a good limit now
• Don’t use insurance limits; these are typically much higher than actual usage
• Get buy-in from your staff on limit levels so everyone’s on the same page
• Adjust the branch’s limits monthly

Update your inventory expectations frequently

• Remember that cash is fluid, meaning Monday does not equal the following Monday or December 1, 2020 does not equal December 1, 2021
• Know some trends aren’t static dates, such as Thanksgiving or Christmas Day

Define delivery schedules

• Figure out the Cost to Deliver, including the armored car delivery expense for each delivery, but also consider the staff costs, such as counting cash
• Figure out Cost to Hold, typically Yield on Earning Assets
• Adjust a delivery schedule that’s best for your branch/ATM
• Don’t order cash based on old habits; define delivery schedules based on usage and minimum/maximum limits

Review your target and limit performance

• Compare usage vs. limits - How close is your actual usage to your limit? Are you able to move limits up and down?
• Make sure your branch and ATM managers are adhering to the set limits
• Coach branches to manage cash down to usage instead of up to a limit

Implement a review process

• Take time to decide if a decentralized or centralized ordering process works best for the credit union:
  • Should each branch be ordering their own cash to the money supplier?
  • Should an internal department approve cash orders?
  • Should someone centrally place all orders on behalf of all branches and ATMs/ITMs?
• Schedule monthly meetings with all departments involved in the cash ordering process to evaluate and adjust process (i.e. branch manager, branch administration, ATM manager, operations)

Catalyst Corporate offers a convenient, efficient service to help you manage cash. For more information about our Vault View Cash Forecasting Tool, reach out to us today: contactus@catalystcorp.org.

As Catalyst Corporate’s Vice President of Sales, Karen Coble directs the sales and training processes for correspondent, payment and technology services. With more than 20 years of experience in the financial services industry, she takes pride in helping credit unions transition to services that add value to their operations.