Strong cash flow, an indicator of business strength, poses a costly and risky administrative burden for cannabis businesses that have not automated cash management.
In most cannabis dispensaries, cash is counted manually multiple times throughout the day. The cash from one transaction might be touched at least six times. Each time this money is handled, there's a chance it can be miscounted or lost to internal theft or robbery.
Ultimately, if a dispensary lacks cash automation technology, at least 9.1% of its cash receipts is consumed by some aspect of managing cash. Where exactly do these costs come from? This blog post walks you through the five key cost factors and explains why cash automation technology is an effective solution.
1. Time and Labor
Time and labor: It takes two people to count and verify cash. A typical transaction can range from $30 to $75. Large dispensaries can bring in as much as $80,000 per day, and as much as 50% more around holiday weekends and Weed Day. As a result, counting cash can take up a lot of time for both managers and budtenders—time that can be spent serving customers. Some dispensaries have a policy that no budtender can leave without balancing to the POS at the end of the day. These businesses often pay out significant overtime wages to cover the time it takes to complete end-of-day reconciliation.
2. Cash Loss
If cashiers are not accountable for balancing cash to POS receipts or cash cannot be quickly counted and secured, it’s exposed to theft. This is a significant risk and a direct impact on your bottom line profits.
3. Banking Fees
There are about 700 banks and credit unions taking deposits and working with cannabis organizations. Financial institutions charge dispensaries about four times the rate a grocery store or other general retailer would pay in bank fees due to the additional reporting and regulatory requirements. Another point worth mentioning is that when manual processes are used for deposit prep, there’s a high potential for human error—for example, a number transposed on a deposit slip. Banks charge hefty adjustment fees for inaccurate deposits.
4. Cash transport
Many dispensary owners also need to pay for the transport of cash to the municipal tax office or to their bank; cash automation secures your cash and enables you to optimize the frequency of armored transport.
5. Accounting, compliance and operations
Manual processes are prone to human error and produce data that's inaccurate, putting your business at risk both legally and financially. As a result, you or your accountant will have to spend more trying to reconcile inaccuracies.
Manually counting cash is labor intensive, stressful and inaccurate, which is why I advise dispensary owners to implement cash automation technology. (Check out our ebook for additional insights.)
The Advantages Cash Automation Technology
Cash automation technology is not new. It's been used by banks for decades. The amount of cash flowing into the typical cannabis store can far surpass that of your average bank branch. That’s why it makes sense for cannabis businesses to leverage this solution to assist in the counting, processing and securing of cash.
A cash automation solution consists of both hardware and software. Cash automation software controls the cash recycler, which is the hardware component. Cash recyclers are vaulted machines that take in and dispense currency. In the process, these devices accurately count and sort cash 80% faster than any human can. They also identify counterfeits and secure the cash. The software driving the recycler can be calibrated to align with your dispensary's cash management processes.
This technology can be a game changer in settings where there's a high volume of cash that needs to be reconciled. Today, many big-box retail stores and other businesses that have a significant number of daily cash transactions use this technology. Cannabis dispensaries are just getting into the game.
Cannabis dispensaries are the most heavily regulated retail establishments. With cash automation, human error is minimized and the best solutions enable direct exports of data to your accounting system for easy, accurate monitoring and reporting. Plus, dramatically reducing the workload required for cash management frees up time that can be devoted to running sales promotions and strengthening customer relationships—initiatives that can generate loyalty and accelerate growth.
Here are just a few of the benefits owners gain when they implement cash automation technology in their stores:
Efficient cash management: Cash automation helps dispensaries reduce the time it takes to prepare start funds, make change, replenish tills and complete end-of-shift reconciliation. There’s no longer a need to count cash multiple times.
Cash security: In many cannabis dispensaries, it’s too easy to pocket cash because there’s so much of it. Owners report cash loss due to internal theft of as much as $1,000 per month. There’s also the risk of robbery. A cash automation solution would provide greater security to your cash as it keeps an accurate record of who put cash into the machine and who took it out. As a result, there’s less cash exposure, greater accountability on your team and significantly less cash shrinkage.
The ability to leverage cash on hand: It’s efficient for dispensaries to leverage cash on hand to pay wages and make payments to suppliers and other vendors. Few do so because of the administrative burden of tracking those payments with the accuracy needed to pass an audit or meet regulatory requirements. Leading-edge cash automation solutions have tracking capabilities that streamline payments, saving owners on bank deposit and cash in transit fees—and making their accountants happy.
Reduced bank fees: Cash automation solutions provide trending data regarding cash levels that you can use to plan bank deposits and change orders. With this information, you can reduce bank fees and decide how many banking relationships you need.
Cash visibility: Advanced cash automation solutions provide dashboards that let you monitor cash intakes and outflows in near real time. You can also see how your cash recyclers are performing throughout your locations and which budtenders are not in balance on any given day. This is the intelligence you need to truly control cash—and cash automation systems make it available without the need to rely on periodic manual cash audits or other labor-intensive, unsecure processes.
Start Automating Your Cash
With cash automation technology, you'll be able to count cash faster, authenticate it quickly and secure it automatically. That means there’s more time and energy to put into developing a solid customer base.
If you want to implement cash automation at your dispensary, simply reach out to schedule a consultation.