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Implementing Bundled Smart-Safes

The Essential Tutorial

An Insider’s Guide

from anIndustry Pioneer

The emergence of electronic safes capable ofdigitally reading and authenticating currency haveessential pushed bank money rooms out to theretail store.

Combined with armored transportation, depositconsolidation and information management,bundled “Smart-Safes” reduce the cost of havingcash in your business, and give key personnelsignificantly more time to spend on activities thattruly add value.

This Tutorial gives you the informationyou need to be in control of your project.

www.cashadvocate.com |You know your business. We know cash.Copyright © 2009 for J Angove & Associates, LLC. All Rights Reserved.

of 28 www.cashadvocate.com |You know your business. We know cash.

Copyright © 2009 for J Angove & Associates, LLC. All Rights Reserved.

About the author: John Angove, our Chief Cash Advocate helped pioneer this application. He played a leadership role in the development of the most successful program in the industry. Cash Advocate is vendor‐neutral, committed to helping you find the best solutions, without being constrained by a single product or service.

“Some of this document is opinion.

All of it is based on experience.” Memo to Senior Staff + “5 Points . . . If you read no further.”

3 What is a Bundled Smart Safe?

4 Streamline your Bank Relationships

Provisional Credit

5 Technologies – Currency

6 Evolving Technologies for Currency

7 Technologies – Change Fund

11 Technologies – Data Center

12 Configuring Your System

14 Armored Car Service

15 Deposit Removal with Smart-Safes

16 Change Order Services

17 Checks

Guarantee of Contents

18 Right-Sizing Your System

20 Balancing

22 Phases of the Project

23 Steps of Your Test

24 Measuring Your Test

25 Tips for a Great Test!

Warning Signs: Test in Trouble!

26 Make or Break Issues

28 Final Thoughts



Memo to Senior Staff:

This is your “How To” document.

The solution sounds as simple as, “We’ll back up the truck, plug in the safe and you’re done counting cash!” Don’t be disillusioned. It has many tentacles. Executing is tough for you, and your vendors. And worth the effort!

Done right, you’ll reduce labor and fees associated with having cash in your business. Cash shrinkage will go down. You may even accelerate funds‐availability.

Done wrong, your project will add significant labor hours, test the patience of managers and your project team, throw your sales audit process into disarray and possibly have a negative effect on your cash flow. Worse, dishonest employees will take advantage of the chaos, resulting in additional cash shortages.

You have plenty of options. This tutorial is intended to help you navigate the playing field.

5 key points (If you read no further):

Appoint an in‐house expert and trainer.

Start slowly. Don’t put schedule ahead of quality.

Find out where you go for help. List the critical areas, like sales audit,

deposit issues, technical support.

Ask how you will receive updates when the government issues new currency.

Build redundancy and growth into your solution.

Don’t get caught up in the sizzle. You’ll find a complete list in a blog on our website titled,

“Deploying Smart Safes: What can go wrong?” (www.cashadvocate.com) CAUTION: The writer assumes you will take the normal precautions when looking at vendors and products. You are encouraged to have your attorney review contracts, and to have the Smart‐Safe inspected by an independent, licensed locksmith who will speak to the physical and software protections afforded your assets.



What is a Bundled Smart Safe Service? Controlled‐access safes with integrated currency‐recognition technology have raised control and management of cash to a level never before seen. Rarely does a solution benefit so many functions of an organization – Marketing, Operations, Security, Cash Management, Sales Audit, Facilities and Human Resources. Bundled with armored transportation, deposit verification and consolidation and even Provisional Credit from the

store,

these systems essentially put the bank in your location. Labor‐hours are reduced, cash control and security increased, sales audit problems diminished, bank fees reduced and use of funds accelerated. Perhaps the greatest benefit is that management no longer wastes peak customer hours, sitting in an office verifying cash drops and making up deposits.

Variations exist but here are the fundamentals.

1) Currency‐recognition technology is incorporated into a “Smart Safe.” Cashiers throughout the day feed currency into bill readers that digitally read, then secure the cash. Audit trails, plus in‐store Reconciliation, End‐of‐Day and Armored Car Pickup reports are created. There is no second counting of cash at the store. Store personnel don’t have access to the cash once it has been verified. This increases security and reduces cash shrinkage. Most service providers guarantee the verified cash. Technical support for the Smart Safe is provided either by the armored carrier, the Smart Safe manufacturer or a 3rd‐party service organization.

2) The safe regularly transmits data to an offsite server usually owned by an armored carrier.

3) Information is then sent to your headquarters and your bank. In some instances, your bank will pass

Provisional Credit on your cash, before it leaves the store or restaurant.

4) Deposits are picked up on a schedule you set up with the armored carrier.

5) The carrier takes the store deposits to a central cash vault, where they are verified by location, and combined into one large deposit for your bank. You receive summary bank reports, plus detailed reports by location. Most services give you on‐demand reports through the Internet.



Streamline your Banking Relationships. You will be able to reduce the number of banks you deal with, and the complexity involved in moving your cash. Each of your locations may today have its own bank account. Or, you use a sub‐ “shadow‐ account” for each location. These accounts have traditionally served to help reconcile deposits by business day, by location. Essentially, you are paying the banks to support your sales audit process.

This will change! Your deposits are going to be verified centrally, and you will probably receive store‐level reports separately from your bank statement. The following diagrams demonstrate the efficiency you should expect.

_____________________________

Provisional Credit Wouldn’t it be great if you could receive credit for your cash, before it leaves the store? A number of financial institutions now pass Provisional Credit to you based on the amount of cash that has been read by the safe’s bill readers. Make sure you are fully briefed on the impact to Sales Audit and Cash Management.

‐ Get pricing with, and without this extra feature!

Today: Each store deposits with a local bank. Deposits have to be swept into the Primary Bank account (where you write your checks) before it can be used. This adds float, cost, complexity and administrative overhead. Since deposits are assumed to have made it to the local banks, such a process is prone to idle balances or overdrafts.

Tomorrow: Your primary bank establishes a series of “Virtual Vaults” by utilizing armored carriers. Deposits are processed in these Vaults, on behalf of your Primary Bank. Your Primary Bank then passes credit on those deposits, eliminating the necessity for local banking relationships.



Technologies – Currency Forget about your experiences with vending machines! The technology used is highly reliable. In fact, you will be surprised at how well these systems function.

In a perfect world, you will want to read and secure currency as part of the transaction. This isn’t always practical. Try to have a bill reader close enough to your registers to enable cashiers to use the counterfeit‐detection capabilities.

• Bill Readers – Single‐Note Feed – You manually feed every note, one at a time. One advantage is that your employees have the opportunity to inspect a note before putting it into the bill reader.

• Bill Readers – Bulk‐Note Feed (Bunch Feed) – These are really convenient, since they allow

you to perform concurrent activities. There are some cautions, though.

o Most bulk‐note feed readers return rejected notes to a reject tray located on the front of the bill reader. They are exposed. The user has to make sure the entire drop was secured. Otherwise, the next user might be tempted.

• Bulk‐Note versus dual, Single‐Note readers – Salespeople argue about this all the time. We prefer bulk‐note feeders, but here are some considerations:

o Bulk‐note readers control the speed of the process. You can’t go faster, or slower than the automatic feed. Speed is predictable, and that’s a good thing!

o Bulk‐note readers cost more than single‐note feeders.

o Bulk‐note readers might experience a higher frequency of jams if you aren’t careful. Human nature is to grab a batch of notes from the till, and put them into the feeder without any inspection.

o Always have redundancy. If cost is an issue, consider having 2 single‐note feeders rather than a single, bulk‐note feed reader.



Evolving Technologies for Currency – You have for some time at tradeshows seen low‐speed recycling systems. The first response is often, “Great! We won’t have to buy change any more!” The fact is you will still need to buy change. Most businesses give out low‐denomination notes and receive higher‐denomination notes. So, you will still buy change. One big consideration when looking at recycling is starting up a shift. The recycler has to be able to immediately dispense currency when the shift begins.

How do you load currency into the unit?

• If the answer is, “Through the feeder,” then take into consideration the time necessary to feed those notes. (And, you are doubling the wear‐and‐tear on your reader!)

• If the answer is, “Bulk load,” meaning that you put a batch of cash into a cassette or stacker, then you don’t know if any of the notes you load will cause the unit to jam!

Lastly, look at the recycler from the perspective of the armored car event.

• Depository cash has to be physically separate from store‐accessible cash if you expect to receive a Guarantee or Provisional Credit.

• Your deposit probably has to equal your sales. How will you make sure you have the exact amount you need, at the time of the pickup?

• Will the answer to the prior two bullets speed up, or delay your armored car event?



Technologies – Change Fund Overview ‐ Cashiers will need change to begin their shift, and will require additional change throughout the day. Any complete system will include an integrated solution for managing change. Almost always the change system is controlled and accessed exclusively by store personnel. Your cash deposit typically has to equal the total cash paid for goods and services during a business day.

Don’t commingle change fund cash with deposit cash. CAUTION! If money moves from your change safe to a depository unit, you can’t retrieve it! The three common methods of providing change to cashiers are:

1) Drawer Dispense; 2) Dispense on Credit; and 3) Purchase Change. • Drawer Dispense Method – The cashier is issued a fixed amount at the beginning of the

shift. Careful! Make sure you quickly retrieve cash back to cover the value of the starting fund or have some other method for reconciling. If not, every cashier will be “over” in their cash.

• Dispense on Credit Method– The cashier enters a PIN to dispense change. Dispensing is typically done on a time‐delay basis to discourage external theft. Most systems give you the ability to put limits on how much money a cashier can dispense on credit. Limits are typically based on “per transaction,” “per unit of time,” and “per day.”



• Purchase Change Method – The cashier inserts currency into a bill reader in order to receive

change. Typically you want it to be a one‐for‐one purchase. • For example, insert a $10.00 bill to receive a roll of quarters ($10.00 value). • When more cash is inserted than dispensed, the net amount must be tracked in order to

balance the user.

“Dispense on Credit” versus “Purchase Change” – • With “Dispense on Credit” you are always exposed to employee theft. And, you must have

a process to handle the accounting and replenishment of your change inventory. Otherwise, cash equal in value to all the change dispensed in a day is going to make its way into your deposit!

• With “Purchase Change” the bill reader used to buy change and the cash it contains should be part of your change management system. It should be used ONLY to purchase change, and accessible ONLY by store personnel.

How Change is Dispensed

• Rolled Coin and Currency Vending – Plastic Tube – • Each roll of coin is inserted into a plastic tube, which is then placed in a column in the

change unit’s dispensing mechanism. • Predetermined batches of currency are rolled up and placed in tubes. Note that the size of

the tubes may vary by manufacturer. The smaller the tube, the fewer the notes it holds, and the more tightly the bills are rolled.

• Advantage – Tube vending systems tend to be less expensive to purchase. But if you only vend 40 or 50 rolls or tubes of currency per day, they might make sense.

• Disadvantages – • Such systems hold fewer rolls. Undoubtedly you will run out of change

during a busy time. The likelihood increases that your manager has to either come in on an off‐day, or share access to the system.

• You don’t know if the correct denomination is in the tube, so there might be reconciliation issues.

• Tubes containing currency might hold more currency than you want to dispense at one time, so you have to again be concerned about replenishing inventory.

• Currency is tightly rolled when you remove it from the tube, and has to be flattened by hand before it will sit properly in the till.



Rolled Coin and Currency Vending –No Tube for Rolled Coin, but Tubes for Currency – Several systems dispense rolled coin without the use of plastic tubes. (Currency may still have to be dispensed by plastic tube.)

• Advantages – • Fast loading. Putting rolls of coin into plastic tubes can be a pain, if you have a high‐

volume store. • Large capacity. This means the manager doesn’t have to share access to the

inventory, even on an off‐day. And, you are less likely to have the safe open during heavy customer times.

• Disadvantages – • These are typically more expensive to purchase and maintain. • The plastic tube size may not hold more than 15 notes. This is a mixed blessing . . .

You have less exposed cash when you dispense a tube, but the currency is very tightly wrapped and doesn’t sit well in the cash drawer.

• Cash Drawer Coin Recycling – A coin sorter, referred to as a “Cash Drawer Sorter” allows the user to empty the coin from the till into the top, and then sort that same coin back into the till. This solution has been around for many years as a means to quickly count and re‐issue a till. A number of manufacturers provide this technology, some of whom don’t make Smart‐Safes. Check out “Coin Sorting and Wrapping Machines.” It has proven to be especially effective for QSR (Quick Service Restaurants) where the manager is pulling tills and re‐issuing the coin. The manager has to be able to hold a cashier accountable for an uneven starting fund. Or, the manager has to take the time to remove or add change and currency to bring the drawer to a fixed level.

• Dispensing Loose Coin – Some systems now dispense loose coin, instead of rolled coin.

o Advantages – You can issue smaller amounts of coin, saving counting time at the end of a shift.

o Disadvantages –

Unlike rolled coin, which can be easily audited, loose coin has to be verified coin by coin.

Auditing your inventory of loose coin is especially problematic. Once a bag has been opened, you will most likely have to piece count it, or purchase a small coin scale.

If you intend to go away from rolled coin . . . and we advise against it, your staff may complain about having to lift the bags of coin.



• Vending – Flat Note – Some manufacturers are integrating ATM‐type technology, dispensing notes flat from cassettes.

o Advantages – Fast loading, saving labor. High volume – These units typically hold about 500 notes per cassette, so if you

are doing a large check cashing business, you should look at them.

o Disadvantages – Higher cost and complexity, meaning your eventual cost for service needs to be

considered. Lower denominations ‐ $1.00 and $5.00 notes can be tough to dispense, which

increases the possibility of error. CAUTION – Make sure your test uses notes from the same source as you will when the system is implemented.

Envelope Drops and Change Inventory Safes ‐ You need the ability to drop currency and possibly checks, using envelopes. You will also need a place to store boxes of coin, straps of currency and possibly lottery tickets. The good news is that this feature is mature in the industry. Our thoughts:

o Envelope drop slots create another opening in the front of the safe. Make sure to have your licensed locksmith inspect the durability of the envelope drop. Ask him how a burglar would attack the safe.

o Envelope drops need to have anti‐fishing protection, so that a burglar, or employee can’t fish envelopes out of the safe.

o You might want some envelope drops accessible by your managers and others accessible only by your armored carrier.

The manager’s envelope drop could be used for stripping cash from registers to balance your change fund, if you are dispensing on credit.

Envelope drops accessible by the carrier would be for qualified currency intended for deposit, but which cannot be read by the bill readers.



Technology – Data Center

The Smart‐Safes are going to communicate critical information. • The information from each location has to be gathered on one system. That system

provides different reports, to multiple stakeholders, with varying access authority levels.

• This may be your best source to quickly answer questions regarding, o Current cash position. o Most recent deposit in transit. o Sales Audit and Loss Prevention reports and audit trails.

• Questions to ask: Use your normal due diligence list of questions. Also ask,

o Who has access to your data? o What privacy protections are in place? o Backup and Disaster Recovery:

What is in place? Do you run a “hot” backup site? What will you experience if the Data Center is down for a short period of

time, or an extended period?



Configuring Your System Look for a vendor that gives you options that work in multiple layouts. This increases efficiency and gives you more flexibility in the future. You will for the most part see the following components in any product line: • CPU/CCU or Controller – This is the administrative terminal for adding and deleting users, assigning

permissions, and running reports. It is common to also use this Controller as the keyboard to purchase change.

o Positioning – If you use it for purchasing change, then the location of the change safe will dictate the location of the Controller. If no change safe is involved, you may have to assign one of the depository units as the main unit.

o See if the vendor offers the option of a standalone Controller. Wouldn’t it be great to have it located in an area where cashiers and managers can balance tills and run reports in private?

o Tip – Find out if user PINs and passwords can be loaded on the Controller, and then pushed out to all peripherals. It will add time and confusion if user information has to be manually entered on every device.

• Depository unit or “pedestal” – Only the armored carrier will have access to its contents, under dual custody (Your employee plus the carrier’s employee). Since this unit is typically only used for making drops, it may have a smaller, less‐functional keyboard than the Controller. It doesn’t need the horsepower.

o Positioning – The closer the bill reader is to the cash register, the more frequently people will drop cash. And the more likely cashiers will drop high‐value notes as part of a transaction, utilizing the counterfeit‐detection aid.

• Change depository – This unit is accessible only by store personnel. The bill reader is used to purchase change from the change safe.

• Depository unit with Bulk Department(s) – In this design, bill readers are part of the store’s main safe. Additional storage exists for the bulk change fund and other valuables. The advantage is that it eliminates the need for a second safe for storing bulk change.

Speed counts. Look for features like “speed keys” and “continuous drop mode,” that make it fast for employees to make drops.



Configurations may vary based on the layout of location.

Cash Advocate recommends:

Never install just one bill reader. Always have a backup.

Place depository pedestals as close to the action as possible. This means employees can verify the authenticity of higher‐denomination notes before completing the sale.

Your employees will sign in and sign out usually just once per shift. Except for purchasing change, they probably won’t have to use the main controller. See if the vendor has less‐expensive options that are faster to use.

Redundancy ‐ Every system can fail, or not perform to expectations. Let’s do a reality check so you know what to expect. Always make sure you have a MANUAL METHOD in place for handling cash. It could be a power outage, a flood, an ice storm that prevents the armored carrier from showing up. If your cassettes get full, you need a backup. Your envelope drop will be your best solution. Make sure to have a process for capturing the necessary information and securing the cash.

Sample configuration ‐

Here is a fairly common layout for

Quick Serve Restaurants. There is no room to position a depository unit at the front counter. As an alternative, those cashiers use the units at the drive‐thru windows. Notice that the Controller is in the back of the restaurant, near the manager’s office.



Armored Car Service – The industry works on razor‐thin margins, with the ever‐present threats of robber and road conditions. Schedules and deadlines are critical. The only way prices can be as low as they are is by scheduling stops on the basis of “conjunctive, en route” service. This means the truck will pick up your deposit when it goes past your door.

Carriers try to accommodate special requests, but these are armored trucks on a route . . . They aren’t F‐16s circling overhead, waiting to strike a target!

Keeping the cost affordable: Your carrier will work out a schedule with you that balances your needs, with his route capacity and schedules. Chances are with a bundled, Smart‐Safe solution you will be getting service on

alternate business days. Typically you might have half your locations on a Monday/Wednesday/Friday schedule, and the other locations on a Tuesday/Thursday/Saturday schedule. • Avoid “lockout” windows – If

you forbid the carrier from coming, say between 11:00 am and 1:00 pm, you are

creating a routing problem. The carrier has to wait until he makes your pick‐up, or double back . Either way, it might affect your rates. Possible solutions to lockout windows exist. A carrier may consider the safe‐lock PINs as one‐half of the dual‐custody process.

o Ask what days work best for the carrier! Ask if there are days of the week when he has extra capacity and is looking for work on his routes. By working with him, he’ll probably work with you.

o Get them in, get them out – It is in your best interest to minimize the stop time. We’re only talking a couple of minutes, so see what you can do to make it fast.



Deposit Removal with Smart-Safes - Two methods prevail in the industry for removing the deposits:

1) Cassette‐Swap – The armored messenger removes a cassette containing your deposit from the Smart‐Safe, and replaces it with an empty cassette. • Advantages –

o Speed of transaction. o No cash exposure.

• Disadvantage –

o Additional cassettes are involved, ultimately raising the cost.

2) Cash‐Extraction – The armored messenger opens the safe under dual‐custody. Then, the cash is removed from the cassette and placed in a disposable, tamper‐evident deposit bag.

• Advantages – o Lower fees.

• Disadvantage –

o Cash is exposed during the armored pickup. If you are used to seeing cash, this may not be an issue. But it may raise the eyes of employees and even customers!

Tip! – Consider a mixture of both solutions, if your vendor will work with you. High‐risk locations might warrant the additional expense for cassette exchange.

You will probably still have a few envelope drops.

Envelope Drops – A store employee will probably be required to remove the envelope drops and place them in a tamper‐evident bag. Procedures vary by carrier and need to be evaluated, balancing exposure with cost. Even if you insist that the carrier participates in counting or watching the removal, remember his first concern is safety.



Change Order Services If you do not presently use armored car service, your employees probably go to a nearby bank to buy change. With armored car service, you can have change delivered when they come to pick up your deposit, usually with no additional stop charge. The pricing is worth every penny, considering safety and the fact that your key employee doesn’t have to leave the location for, say 30‐ to 45‐minutes just to buy change. Putting it in Context – Each location likely has a fixed value, General Change Fund. Cashiers start a shift with a pre‐set amount of change in their till, and then receive additional change throughout the day. Before completing his deposit, your manager daily ensures that he has transferred cash back to the store’s General Change fund, equal to the total amount of change issued at the start of, and during all shifts. Here are some popular options you should consider:

• Cash‐for‐Cash – Your store will order change at least one day in advance. When the carrier arrives, your store personnel will exchange a separate deposit or payment equal to the value of the change order. The advantage is that the value of the store’s change fund stays constant. And, you don’t have to reconcile differences related to change funds. This means your store personnel must have that additional deposit prepared and available at time of pickup.

o One variation you might be offered is to include a separate envelope with your deposit to cover the cost of the change order, the value of which is added to the single deposit total. The carrier will sign for a single amount.

o Another variation is to designate a specific amount equal to the value of the change order, to be deducted through software when your deposit is balanced. Your manager might the day before his deposit pickup, order $250.00 worth of change. He then through the Controller designates that amount for change payment. The bank or carrier will use its software to remove the change order payment from the deposit amount, thus adjusting the appropriate store totals so you can still reconcile your sales audit.

• Debit‐for‐Cash – Your store would order change through the bank’s, or carrier’s Change Order Entry System and not key any amount into the safe’s Controller. The money room software would debit the deposit for an amount equal to the change order, and then post a net amount to your account. This net amount would be the value you use for reconciliation.



Checks – Other than cash and checks, no other payment method still requires you to go to the bank to make a deposit. Today, it’s more efficient to move checks electronically from the store. Ask your bank about its electronic check services, benefits and risks. Here are two great alternatives to transporting physical checks:

• “Check conversion” is the converting of a paper check to an electronic payment, processed through the Automated Clearing House (ACH) network. Typically a check reader/scanner captures the information (magnetic characters) on the bottom of the check, which is used to generate the payment. An image of the entire check is also captured for record‐keeping. There are specific guidelines you have to follow, which your service provider will explain.

• “Check 21,” or “Check Clearing for the 21st Century Act” refers to using a digital image of a check to move it from one point to the next, without having to physically move the check. The check retains all the merchant protections you have with the original check. Again, there are guidelines you have to follow. Get all the facts.

Guarantee of Contents - Most services advertise that the validated currency is guaranteed. That’s the currency that has been authenticated by the bill reader, and secured inside the depository safe. Typically the guarantee excludes envelope cash drops and checks.

But what does the guarantee mean? Here are some questions you need to ask. You may think of others.

1. If the safe says there is $1000.00 and the cash vault has a different number, which count prevails? How is a cash overage, or shortage handled?

2. If the safe has been attacked by a burglar or robber and the money taken, what restitution do you receive? Under what conditions?

3. If the safe is stolen, is the cash guaranteed based on the available information or audit trails? a. Is the value of the safe itself covered by the contract?



Right-sizing the System – This is not an exact science, but here is a step‐by‐step process we have used for years . . . • Determine the number of notes you deposit. (Notes, not dollars!)

You deposit “dollars,” but your cash control systems hold “pieces” of currency. To make this quick and easy, now and in the future, determine your average note value.

• To Determine your average note value, o Gather actual deposit slips showing how many notes you deposited, by

denomination. The more data you gather, the more accurate your information will be. 30‐days would be great.

o Now, create a spreadsheet to analyze the data. Here is how we do it: Denom 1.00$ 5.00$ 10.00$ 20.00$ 50.00$ 100.00$ TotalUnits 7 138 178 265 18 22 628Value 7.00$ 690.00$ 1,780.00$ 5,300.00$ 900.00$ 2,200.00$ 10,877.00$

Average Note Value: 17.32$

Once you know your Average Note Value, you can easily convert any dollar volume to note volume/capacity needed. Using this example of $17.32 average note value,

o Sales volume = $6,234.00. Total # of Notes = 359.9 (Divide by $17.32.)

Capacity and Service Days/Week The number of notes you need to store (“capacity”) varies based on the number of armored service days you have.

‐ Always assume that the bill reader cassettes will continue to receive cash, o On the day of installation in the safe by the carrier. o Every day between pickups, o And the day of removal from the safe, on the next pickup.

‐ Then, for safety, allow yourself some breathing room. What if there is an ice‐

storm and the armored carrier can’t arrive? So, if my armored car schedule was for pickups Monday and Thursday, my system would have to span 5 days, including Thursday and Monday, PLUS a safety day.



Using the “628” bills per day in the previous spreadsheet, we do the following calculations: Pickups/Week 2 3 4 5 6Capacity Days 6 5 4 4 4Maximum # Notes 3768 3140 2512 2512 2512Cassettes (@1400 notes) 3 3 2 2 2

‐ Example – o 2 Pickups/Week = 628 bills per day X 6 Capacity Days = 3768 notes o Divide total notes by 1400 notes/cassette = 3 cassettes.

What happens if you don’t have sufficient capacity?

Let’s say you install too few bill readers and your system fills up. You will lose productivity, because staff will have to make manual drops. But, here’s what else might happen:

o You’ll have to pay for an emergency armored car pickup.

o Your cashiers will start making envelope drops, possibly resulting in additional fees.

o If you receive credit‐from‐the‐safe, you probably won’t receive credit for any cash not verified by the bill readers.

5 competing factors ‐ Now comes the tough part. You will be faced with plenty of options, and lots of “sizzle.” Needs may differ by from store to store. The location or format will bear heavily on the design of your system, and frequency of service. You have to balance,

1) Need for Security 2) Layout of the location(s)

3) System Capacity 4) Cost Impact by Configuration

5) Days of Service

(This is a good time to review your “decision criteria” list suggested in the “Phases of the Project” on Page 22.)



Balancing - Your standard systems were probably set up based on being able to separate cash from Business Day‐to‐Business Day. Here’s a typical, though simple procedure played out in stores every day. A start‐up fund of $50.00 is transferred from the Change Fund to the till. More change is transferred throughout the day. At closing, the first thing you do is retrieve the start‐up fund of $50.00 and balance the store’s General Change Fund. Change Fund Cash in Till Cash Sales Cash Deposit

$500.00 $450.00 $50.00 Transfers starting drawer to till

$2550.00 $2500.00$500.00 $2500.00 $2500.00 Cash moved from till to par Change Fund;

Balance is deposited.

Tomorrow, things will be dramatically different!

1. Cash will be separated ELECTRONICALLY by Business Day, but physically commingled. 2. “Reported Cash” does not mean “Reconciled Cash.” There will be differences, although

usually just minor amounts. You cannot finish your Sales Audit process until you have the final deposit verification report from the cash vault, confirming the “Reported Cash.”

Here is what is going to happen: Look at the diagram at the top of the next page. Day 1, 2 and 3 are Business Days, or “Accounting Periods.” The “Pickup Period” represents the period of sales during which cash was dropped in the Smart‐Safe, from one armored pickup to the next.

• Each pickup will include cash from more than one Business Day.

• Your carrier will parse the totals for you, by Business Day.

• You will receive reports that at first might seem confusing. Rest assured that you will soon master an understanding of the information.

• YOU NEED A RULE TO HANDLE DIFFERENCES. Cash overages in the cassette cash can occur. This is a mechanical issue . . . a physically poor note may have gotten too far into the feed path to be rejected, but the bill reader could not determine the denomination. So, you have an overage. Most carriers apply a rule that says all differences will be applied to the last complete business day. Talk about it.



This looks difficult at first . . . but it works! Cassette cash is physically commingled across Business Days, but separated in the reports. Your reports will accomplish this:

• The “Pickup Period” runs from one armored pickup to the next. o August 10th: $490.00 was included in the prior pickup and deposited. An additional

$1560.00 was in the cassette for this pickup. o August 11th. The total deposit for this day was $4750.00, with $4710.00 in the cassette,

and a $40.00 cash drop envelope.

• August 12th. The $510.00 was in the cassette and went with the deposit. It will show up as “Prior Pickup” on the next report.

• The total amount of cash taken to the cash vault for verification was $6820.00.

Provisional Credit – A good number of banks in the country now give credit for the verified cash, even while it is still in the store. You can expect the rules to be something along these lines:

Expect the banks to insist the armored carrier guarantee the cash. Only verified cash (cassette cash) is subject to Provisional Credit. The store/restaurant must have NO access to the verified cash. Hot Tip – Co‐ordinate your Provisional Credit amount with your End‐of‐Day timing. This eliminates an additional reconciliation.

Your credit should be based on the NET ADDITIONAL, VERIFIED CASH. Using the above example, you would then receive $1560.00 provisional credit on 10‐Aug; $4710.00 on 11‐Aug; and $510.00 on 12‐Aug.



Phases of the Project - 1) Determine your Need • Baseline the present situation, including bank credit cycle . . .

the time it takes today to move money from the till, to your main account.

• Determine your decision criteria in order of priority. o (Save time, reduce cash shrinkage, etc.)

2) Evaluate Options • Is a Bundled Smart‐Safe the only solution? • What banks and carriers can you work with? • What technology? • Test – (see “Steps of your Test”) • Interview users and management for feedback.

o Likes, dislikes, “if only it would . . . ”

3) Resolve your Concerns

• Technical, financial (pricing), legal (contractual) • Perform due diligence on vendor(s) –

o Can they support you for the life of the agreement? o Interview existing users . . . more than 3!

4) Rollout • Go slow and be alert for issues of scaling, as you add volume, locations and markets. Your information will expand significantly.

5) Turnover • Take the process out of test mode and turn it over to the organization.

6) Lessons Learned • What measurements have to be in place to ensure ongoing satisfaction?

• What did you do well, and what could you have done better?



Steps of your Test

1. Conference Room Pilot: a. Bring a system into your facility. Emulate several operators, shifts, business days and at least 2

armored car events. b. Create draft user manuals. c. Follow the reports through your system.

2. Pilot Site:

a. Just 1 location to start! b. Make sure your project manager is on‐site for the start and end of

every shift, the End‐of‐Day event and armored car pickup. c. Take copies of any reports that feed off‐site reports, such as

armored car removal report, and the end‐of‐day report. (If you are doing this in conjunction with In‐store, Provisional Credit, add those reports to this list.)

d. Meet in‐person with the people who will be receiving the information. This includes the cash vault (money room), your Sales Audit, Cash Management and your Security departments.

e. Interview all the stakeholders, especially at store/restaurant level.

3. Additional Sites: We suggest 3 to 5 additional locations to prove out the solution. a. Repeat steps 2 (b) thru (d) of the Pilot Site. b. Interview all the stakeholders. c. Finalize your training manuals. d. Note the impact of adding multiple days and volume to the reports.

i. Make sure you balance and meet ALL schedules! CAUTION – THIS IS THE STEP WHERE YOUR SALES AUDIT AND CASH MANAGEMENT GROUPS WILL BE PUT TO THE TEST.

4. Phase 1 Rollout: There are different schools of thought on this.

a. This tests the vendor’s ability to manage your account across multiple locations, and even markets. He has economies of scale by concentrating the rollout in a single market.

b. You have to balance quick wins with the vendor’s ability to support you in more than one market. i. Don’t put schedule ahead of quality. If the vendor says issues will be minimized by doing

a market‐based rollout, we recommend you work with him. c. Problem locations – This might be the time when you want to target “trouble” locations. They

might have higher volume, poor management or a cash shrinkage problem.

5. Phase X Rollout: This phase should be “cookie‐cutter,” if you’ve picked the right vendor and done everything else right.

“Test” or “Pilot?” We prefer to call them “Pilots.” A “Test” has a pass/fail associated with it. A “Pilot” conveys the impression that it is the START of something, and gains more positive support.



Measuring your Test

Here is our list . You decide what is relevant, and how you define “success” in each area. Category Details Remarks1) Balancing Cashiers or servers Ease and accuracy

Shift Ease and accuracyBusiness Day Ease and accuracyDeposit Report Internal Cash ManagementDeposit Report Bank ReconciliationSales Audit

2) Money Room Deposit Processing

Number of differencesValue of Overages (Why?) Value of Shortages (Why?)

Change Orders Number of Errors Service Failures (missed delivery)

3) Schedule Shift beginning/end What was the time impact on staff & management?End‐of‐Day Reports What was the time impact on management? Corporate Sales Audit Were there savings or additional time required? Armored Car Did they meet all service days?

Bank‐out schedule errors? Issues? Other?

Banking Plot Bank Credit (cash flow) versus Sales Date. 4) Operations Employee hours Cashiers or servers

Location management Sales Audit (corporate) Cash Management (corporate)

Help Desk Mean‐Time‐To‐Respond (define, “Respond”) Field Technical Support Mean‐Time‐To‐Respond (define)

Mean‐Time‐To Repair 5) Technology Depository Systems

(by type) AccuracyTechnical issues (request an analysis by problem code) Uptime Availability – Was a location ever totally down?

Change Dispensers (by type)

AccuracyTechnical issues (request an analysis by problem code) Uptime Availability – Was a location ever totally down?

Order Entry System Note any issues locations had placing change ordersData Center Note any issues you had accessing the data center, plus

concerns over retrieving data. 6) Banking Credit Cycle Plot sales or “revenue” date with the date you receive use

of the funds in your Main Bank. Quality Accuracy of deposits

Accuracy of fees Help Desk responsiveness



Tips for a Great Test!

Remember the priorities:

1) Balance – Store Level, Corporate Sales Audit, Banking.

2) Schedule – Make sure you meet critical deadlines, such as bank credit and sales audit.

3) Additional Delight – What else did the system do for you? a. Tangible benefits that can be measured in dollars, such as labor savings, fewer

cash shortages, and interest expense reduction; don’t forget to measure an increase in sales!

b. Intangible benefits such as morale improvement

Objectivity – We recommend obtaining copies of all technical service repairs through your Phase 1 Rollout. Getting the information at the “granular” level is important.

Warning Signs: Test in Trouble Volume does not solve problems! If you have trouble during the test, it will only get worse.

An axiom is that 3 engineers can make anything work. But is it scalable across your footprint?

1. Repeated failure to execute at any level –

a. Balancing – This is EVERYTHING!

b. Information – Take time in the early stage. This is one area that will explode exponentially.

c. Additional delight – Some delight is “nice to have.” Other delight helps justify the project.

2. Failure to balance, or explain differences.

3. Too many hands on deck. Make sure the vendor isn't using a “work‐around” to get the job done. Remember ‐ You want a solution that can be rolled out across your entire footprint. Hand‐holding NEVER replicates well.

4. Unexplainable differences in cash or information. Stores that cannot be reconciled.



Make or Break Issues -

This list is provided to emphasize specific areas of potential concern. Please consider these points in addition to your normal due diligence and contract review.

• Coverage ‐ What if my provider doesn’t operate across my entire footprint? (Or, he’s known in some areas to have service issues?)

o You might have to use more than one vendor. But, we recommend using only one vendor in a region. This minimizes training issues, and vendor‐management overhead.

Note: Once you have more than one vendor, you have to manage more than one method of receiving data for banking and sales audit. Make sure you work this through!

• Location Resets (Remodeling) – Some of your locations will be shut down for perhaps a month or two during the life of your agreement. Equipment may have to be de‐installed, stored and re‐installed.

o Establish those costs during the negotiations so you aren’t surprised. o Find out if you have to pay the entire monthly fee while the Smart‐Safe is in storage. That fee may

include armored transportation and cash processing, and technical support . . . none of which you will use during this period.

• Location Closings – It’s going to happen. Find out up front from each vendor what their conditions include. See if you can get the option to redeploy the safes rather than have them sit idle.

• Some notes will never be accepted by the bill reader. ‐ They may be counterfeit or just poor

quality .Do you have a procedure for this? o Notes that haven’t been cut properly may be an issue. In this case, you will see a wide border on the

top or bottom, and a thin border on the opposite side. The bill reader can’t focus on the areas it reads, so it rejects a perfectly legal note. For legitimate currency, here are two suggestions:

Put the notes back in the till, and try to dispense them in the course of business. Or, Use an envelope to drop them in the safe. (Note – Excessive envelope drops may cause your

bank or carrier to charge penalties.)

• Loss of information (CCU crash) –This is bound to happen. You may lose all your data at the location, or just enough to make it impossible to reconcile. Now you are into damage control. You need to balance and ensure you receive credit for all your cash. The good news is that the armored carrier and the money room verifying your deposit have numerous controls in place.

o Balancing your cash – The carrier might ask your staff to sign a deposit pickup report listing the amount as, “Subject to Count.” Armored carriers usually need to have a value applied to any deposit they pick up. You may be asked to provide POS printouts to substantiate the deposit value. But our experience has been that the money room will do a “sniff test.” If the deposit is typical for that day and location, there shouldn’t be any arguments.

o Time is valuable – Your vendor should know before you do, that the information was lost. He should have exception reports that highlight the problem, and a team of people on his end familiar with putting the pieces together quickly. Make sure he agrees to notify you immediately.



• Unexplainable differences ‐ You might have a rare but unexplainable difference between actual cash verified by the money room and the amount reported by the safe. Usually, this is the result of an unreadable note that is too far into the feed path to be rejected. The extra note in the cassette creates an overage in your deposit. Rare mechanical or software problems could also cause a difference.

• Currency Updates (new series of notes) ‐ What is the vendor’s plan for updating bill readers, when the government issues a new series of notes?

o Methodologies used: Pushing software out over the WWW or through your WAN. Using a handheld device that flashes the memory. (Make sure you understand the logistics

and timing.) Chip or SIM‐card (a.k.a., portable memory chip) change. Again, get the vendor to explain the

logistics, access to the system, etc. o Cost. Are updates covered under your agreement, or is there an additional charge? o Commitment to update, expressed in calendar days from release of the software from the bill reader

manufacturers.

• Software Updates – Look at this in two ways . . . o Some updates are transparent to User. Will you be advised? o Some are obvious to User, possibly requiring additional training and updates to manuals. Ask more

questions.

• Installation & Safe Removal ‐ What additional expenses will be invoiced to you? o For example, freight, installation, training, removal of the existing safe.

• Bill Jams – Check out the possible charges for these 3 possibilities . . .

o Operator error – feeding mutilated notes into the reader. o Equipment fatigue or wear‐and‐tear. o Armored messenger or service technician procedural error, such as failure to reseat the cassette

properly.

• Limits on Envelope Drops – You will have envelope drops. Find out what the contract says regarding limits. If there is a limit per location, can you average this over your service network?

• Counterfeit Notes – The bill readers may bring to your operation a new level of counterfeit detection. Readers typically only indicate that a note it can’t read, not that it is counterfeit. There are reasons that even valid currency cannot be read, such as poor quality, improper cutting or stains in areas analyzed by the reader. When a bill is rejected, you can’t just declare it to be counterfeit. Train your people to check the notes that cannot be scanned, using the techniques you can find on the government website,

http://www.moneyfactory.gov/newmoney/main.cfm/materials/download

• CAUTION: Make sure your employees understand that this technology can, and occasionally will reject perfectly good notes . . . before they confront a customer.

• Joint‐liability Agreements – If the safe is serviced by a third‐party, and cash comes up short, what is the

restitution process and timing?



Final thoughts (unfortunate but not uncommon)

• Expect to identify existing employee theft, in the first 2 or 3 installations.

• Don’t be surprised when you deploy about 10 locations, that a manager has been

contributing to cash shrinkage. (Our experience has been that they will be disruptive during

the training.)

• Dishonest employees may sabotage the system by forcing jams in the bill readers. That

means their drops would no longer be verified. Ouch! Watch for patterns.

This isn’t easy, BUT IT’S WORTH IT!

For more information, contact [email protected] 317.645.3864

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