Cash receipts: not going anyway anytime soon
John Bultema, executive VP, treasury management and currency processing solutions for Fifth Third Bank, spoke with Chain Store Age editor Marianne WIlson about the current status of cash receipts in retail store. And how they aren’t going away anytime soon.
What is the current status of cash handling in retail stores?
Overall, cash as a form of receipts has had a very slow to marginal decline in retail. In some industries such as restaurant, convenience store, and fueling stations, cash usage has remained relatively flat.
While mobile payments are getting a lot of attention, the early results show that existing debit and credit users are the ones transitioning to mobile, not cash users. As the value of cash receipts declines, the cost of handling cash increases on a relative basis.
How do retailers typically handle cash receipts?
It varies from company to company or store to store, but retailers generally have a system in place that involves multiple individuals responsible for handling cash, counting down drawers throughout the day, dual control processes for the end-of-day deposit process and responsibility for counting down or building till amounts for the next-business-day activity.
Implementing a program such as Fifth Third Bank’s processing solutions (CPS) allows retail managers to eliminate many of these back-office functions, giving retailers the opportunity to redirect staff to focus on customer-based objectives rather than the administrative activities. It also helps free up key store resources to allow them to spend more time focused on creating a more personalized and memorable shopping experience.
What challenges do retailers face in managing cash receipts?
There are several factors that are causing retailers to think differently about handling cash, including that most financial institutions are reducing the number of brick and mortar branches available for commercial deposits.
Also, in some cases, financial institutions are significantly increasing the deposit charges on commercial clients depositing in banking centers. Both scenarios are resulting in clients either developing more banking relationships to satisfy their stores' footprint or to consider alternatives such as smart safe technology or virtual vault.
In addition, there are a number of external factors motivating the retail industry to leverage technology, data and, ultimately, automation to gain efficiencies, improve working capital, and create scale across their enterprise.
We are hearing a fairly consistent message from clients that managing armor car service providers can be a time consuming and expensive task. Having a single point of contact to manage the relationships on their behalf allows them to focus on activities more relevant to their internal and external clients.
Tell us a little about Fifth Third Bank.
Fifth Third Bank is a diversified financial services company headquartered in Cincinnati, Ohio. The company had $142 billion in assets and operates 1,295 full-service banking centers, including 99 Bank Mart locations, most open seven days a week, inside select grocery stores.
We also operate 2,650 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina.
Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors.
It is among the largest money managers in the Midwest and, as of September 30, 2015, had $297 billion in assets under care, of which it managed $25 billion for individuals, corporations and not-for-profit organizations.
Fifth Third Bank was established in 1858. Member FDIC.
How does Fifth Third Bank’s currency processing solutions work?
Our CPS is an innovative, remote cash-capture solution helping automate the cash-handling process that begins with the time clients collect the cash payment to the time the money is deposited and credited into their account.
The CPS daily provisional credit helps clients consolidate banking relationships, improve working capital, helps reduce the risk of fraud and theft, and helps facilitate the bank reconciliation process by virtually eliminating adjustments.
CPS is provided in coordination with a bank-approved armored courier provider. In partnering with an armored courier, Fifth Third is able to lead the industry by leveraging remote payment processing technology in conjunction with our cash solutions.
Based on the client's business needs, cash will be retrieved from the smart safe by an armored carrier for delivery to the cash vault. Information from the device is then used to provide clients with provisional credit based on the prior day's activities.
Fifth Third manages all aspects of the solution including the smart safe hardware, software, and maintenance supplier, armor courier pick-up and delivery, implementation, program management, online reporting and portal, and 24/7 customer service as a single point of contact for our clients.
Are these services unusual?
It is unusual to see a financial institution commit and invest in a managed services approach. Nearly all financial institutions will provide a provisional credit solution in conjunction with a national armor car supplier to deliver an end-to-end smart safe solution, however, we are the only bank that has taken a holistic managed services approach.
Over a period of eight years, Fifth Third has learned from others within the industry as to what works well, what doesn't, what our customers need, and where the market is heading.
What advantages does it offer over other solutions?
CPS offers all of the traditional benefits of using a smart safe solution such as reduction in cash-handling expenses, labor reduction and reallocation, and safety and security of employees, customers, and cash.
The managed services approach within CPS offers clients more benefits not available with traditional options such as supplier management, comprehensive program and implementation management, 24/7 dedicated client support, real-time information reporting with proactive notification on events and activity, all through a single point of contact with Fifth Third Bank.
If you could give retailers one piece of advice when it comes to managing the cash they receive from customers, what would it be?
There may not be a one-size-fits-all solution for how your company handles and manages cash. Factors such as risk, location, cash value and amounts and available resources should be factored into choosing the best solution for your business. We have clients that have deployed a comprehensive deposit solution across an enterprise using a combination of branch banking, virtual cash vaults with armor car service, smart safe, and recycler soultions.
Survey: Which retailer will dominate online holiday shopping?
A familiar name factors heavily into the online holiday shopping plans of consumers.
According to a new poll from Reuters and Ipsos, 51% of consumers plan to do most or all of their online holiday shopping at Amazon.com. This dwarfs the next-most-popular specific retailer, Walmart, favored by 16%.
Other traditional and online retailers combined for the second-highest response of 18%. Other popular retailers with low responses include Target (3%) and Macys (2%).
In one good piece of news for omnichannel players like Walmart, Target and Macy’s, 33% of consumers plan to shop both online and at stores. A similar percentage plan to shop primarily at stores (18%) and online (17%). Sixteen percent are unsure, while 8% each said they would only shop at stores or online.
Survey results show that despite significant investments in e-commerce and omnichannel commerce by brick-and-mortar chains such as Walmart and Target, Amazon.com still dominates the online retail space by a healthy margin.
With Amazon starting to dip its toes into physical retailing, retailers like Walmart will need to step up both their online retail capabilities and consumer engagement.
More c-suite changes for Francesca’s
Francesca's has lost its chief financial adviser just weeks after naming a new head merchant and a new senior marketing executive.
The Texas-based company announced that CFO Mark Vendetti has resigned from the company effective Dec. 4. Cindy Thomassee, Francesca's current VP of accounting, has been appointed to the role of interim CFO and will report directly to CEO Michael W. Barnes while the company conducts a search for a CFO.
Michael W. Barnes, chairman, president, and CEO, said: "I would like to thank Mark for all of his efforts as our chief financial officer over the last two and a half years. I am grateful for Mark's time at Francesca's and I wish him continued success in his new role. We appreciate Cindy stepping into the role of Interim CFO as we conduct a search for a permanent replacement."
In addition, Francesca's announced preliminary sales results and updated earnings per share guidance for the third quarter ending Oct. 31. Net sales increased 19% to $103.4 million as compared to the third quarter last year with same-store sales up 4% for the period. The company now expects diluted earnings per share to be in the range of 15 cents to 16 cents per diluted share.
Barnes added: "We are pleased with our better than expected sales and comps in the third quarter, driven by a terrific product assortment across categories. During the quarter, we saw strong and broad consumer response to our assortments which is driving improved conversion and higher units per transaction; leading to increased average transaction values and the overall comparable sales increase. I look forward to discussing the details of our third quarter results, as well as fourth quarter and full fiscal year 2015 guidance during our third quarter conference call next month."
Francesca's operates 620 boutiques in 47 states and the District of Columbia.