Managing working capital by unlocking value through efficient retail cash management

Vijay Iyer
Senior Vice President, Cash Logistics Solution

India is today the fourth largest retail market in the world, generating more than 10% of the country’s GDP. As retailers work towards maintaining their market presence in these intensely competitive times, working capital plays a key role in enabling valuation and transformation strategies. An efficient cash management solution that helps retailers release trapped cash, and have real-time visibility & analytics, can provide efficient management and utilisation of capital, ensuring growth and broader market success.

Statistics show that despite the seeming proliferation of digital payments, cash continues to co-exist as a payment mode by consumers. According to the CMS India Cash Vibrancy Report, in FY23, organised retail observed an average annual increase of 14.44% in cash collection per retail cash management (RCM) point.

Fortunately, in recent years, there has been rapid improvement in cash logistics technology, offering smart solutions for an efficient working capital strategy in the organised retail industry. According to a recent report by Retailer Association of India (RAI), the sales volume of organised retail segment is projected to grow to USD 136 billion by 2028 with a CAGR of 17 percent. It, therefore, becomes critical to have a smart solution that can keep up with the pace of sales volume while seamlessly ramping up efficiency in working capital management.

  • The challenges and opportunities –
    Manual cash management comes with a set of challenges, each of which can be countered by an integrated cash logistics solution customizable to business needs.
  • Accurate and efficient accounting
    Today, only 25% of India’s retail sector is organised, but this is likely to increase with every retailer now mandated to maintain proper records. As all retailers implement these processes, they will need more defined methods of handling their daily cash management and maintaining efficient record keeping. A smart Retail Cash Management (RCM) solution comes with automated reports and hassle-free bookkeeping so that retailers can adhere to regulatory requirements. They can also provide real-time cash flow and holdings visibility for a holistic picture of the business's liquidity. Immediate access to these insights lets retailers streamline cash management, forecast trends, and take strategic business decisions.
  • Heightened security
    Cash-related crimes pose a threat to businesses — from employees dipping into registers, to the risks of in-store thefts, to security risks associated with collecting and delivering cash to banks. RCM solutions come with high-security technologies and processes which minimise access to cash post-transaction and eliminate human-induced risks. They use stringent authentication measures, sealed tamper-proof deposit bags, trained professionals, and secure transportation — which adds multiple extra layers of security.
  • Soaring logistical efficiency
    Modern RCM Solutions is a boon for retailers that have a wide network in smaller towns and remote areas and perhaps lack access to immediate banking channels. RCM automation provides the fastest, most efficient, and most secure way to consolidate and streamline cash collections. It allows for centralised visibility and control over cash balances on a daily basis. The aim is to improve liquidity planning and attain a more efficient use of the company’s financial resources.
  • Savings in time and money
    Manual cash handling is costly in terms of time, labour, and increased risk of errors and theft. In traditional settings, employees spend a considerable portion of their workday on cash handling, taking them away from other essential tasks. With RCM solutions managing cash, employees can dedicate working hours to high-value tasks like customer service and sales, driving higher revenue and customer satisfaction. It can also lead to decreased labour costs since the staff required will only be for core duties and not logistical ones. And, of course, expenses associated with security will reduce, resulting in high savings.

  • Finding the right solution for your business -
    A smart RCM solution can help increase the value of your cash flow and it is broadly divided into two categories:
  • For retailers and retail chains
    Retailers can avail themselves of cash pickup and delivery, which can be customised to align with the unique demands of each business. These collections are done through high-security methods, with cash transported to vaults for stringent processing with real-time reporting and tracking. This is an excellent solution for retailers in urban cities for increased security and efficiency.
  • For enterprises with pan-India presence
    Businesses in small towns often need help with challenges like limited banking access, a dearth of technical know-how, and subpar security. You should look for solutions that provide holistic ways for streamlining cash collections, which can be supplemented with bespoke teller management to ensure safe cash handling at all transaction points. To make this process more secure, the often-tricky logistics in these areas are countered by high-security cargo transport to safely move cash from businesses to banks. This comprehensive approach ensures that businesses can effectively manage their cash transactions, location, and local infrastructure, with no bar.

For retailers, pursuing strategies that emphasize effective cash flow will likely differentiate those companies that are successful in achieving their transformation goals. An automated cash management solution reduces the amount of time and money that your business spends on making bank deposits, on cash handling materials, and on labour costs. It also saves on retail shrink and fraud, preventing losses from occurring at your retail store. An effective & smart RCM solution can cut down on your frequency of deposits and reduce the amount of cash that you need to keep on-site by sorting and processing generated cash quickly so that it can be recycled throughout your business. By adopting these solutions, retailers can ensure effective working capital management and considerably strengthen their position in the industry compared to their competitors.