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The Best ATM Cash Management is Driven by Process, Not Forecasting

Strategically Speaking
Mar 14, 2012

Author: Paul Miniutti,

Many times when discussing ATM Cash Management the focus of the conversation turns to, “How good is your forecast?” I submit that there is a better question to ask, and that the focus on effective ATM Cash Management should be “How good is your process for reconciling all that money?”

The Forecast

The forecast is one small piece of ATM Cash Management. In most cases, what has happened over the last 30 days at an ATM can provide an effective forecast: simply add up what has been withdrawn for the ATM and divide by 30. That will give you a per-day cash need.

(Total Amount Withdrawn for Last 30 Days) ÷ 30 = per-day cash need.

Depending upon the number of days between cash loads, “pad” the cash order with an extra day or two. For example, if you are cash loading an ATM every seven days and that ATM has dispensed $60,000 over the last 30 days, your forecast for one cash load would be:

$60,000 ÷ 30 = $2,000 per-day cash need.

(7 days x $2,000) + (2 pad days: $4,000) = $18,000 forecasted for cash load.

This is not that complicated and, in most cases, can be very effective.

The Reconciliation

What can be complicated is the process to reconcile from cash load to cash load. We call this the “Cash Cycle.” If we use the above example for our first order of the Cash Cycle, and then have a subsequent cash load of $19,000 (slightly more because our withdrawals increased over the previous 30-day time period), and we are doing cash swaps, the Cash Cycle looks like this:

                                         PaulMBlog 2PaulMBlog 1

  Day 1: $18,000 put in the ATM – Load 1
          Money withdrawn from the ATM

Day 2: Money withdrawn from the ATM

Day 3: Money withdrawn from the ATM

Day 4: Money withdrawn from the ATM

Day 5: Money withdrawn from the ATM

Day 6: Money withdrawn from the ATM

Day 7: Money withdrawn from the ATM

   Day 8: $19,000 put in the ATM – Load 2
                             Money left over from Day 1 (Load 1) returned
          Money withdrawn from the ATM

The reconciliation of this ATM requires deeper understanding:

  • Tracking the cash going into an ATM – the cash loads.
  • How much money has been withdrawn from the ATM, (including partial day 1 and partial day 8 amounts as the armored company most likely loads the ATM mid-day.)
  • The money returned from the ATM – from Load 1.

This reconciliation can get complicated. Without a thorough understanding of the day-to-day activities at the ATM, it is easy for the ATM to “go out of balance.” Many times you are dependent on ATM cash reporting from the armored company. If this is inconsistent, one of two things usually happens:

  • A lot of time and resources are spent to reconcile the ATM(s).
  • The out of balance is ignored and more cash is ordered—usually more than is necessary—which ultimately increases the costs of running the ATM(s).

Final Thoughts

Forecasting is one small piece of effective ATM Cash Management. The larger process that delivers clear visibility and tight control of the movement of cash from cash load to cash load can “make or break” your opportunity to run efficient, profitable ATMs. Rather than a singular focus on forecasting, a broader perspective and implementation of the detailed analysis needed to tighten the Cash Cycle can help drive greater success at the ATM.

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