Cash when treated like any other commodity, follows many of the same fundamental principles. Thus, it is useful knowing the norms and standards which have been set in place by banks and credit unions in their processes. It is imperative to understand and debunk some common myths to fully utilize efficient cash management practices.

CASH DEVICES MUST ALWAYS BE AT FULL CAPACITY

In ideal conditions, demand must always equal supply. However, when cash devices are at maximum capacity statistics show that the supply exceeds demand by as much as 30%. There are some factors which lead to this such as not fully understanding the demands and the human aspect where everyone wants resources to be in excess quantity so that there is no shortage. However, this may reflect poorly on the institution. The excess money could just have efficiently been invested and utilized to maximize profits and returns. It is never a good idea to keep funds idle. Idle cash is like sand, it runs out of hand, and pretty soon there is not enough left to go on.

CASH MANAGEMENT PROCESSES HAVE NOT CHANGED

A fundamental myth is that there has been no innovation in the cash management methodologies. This is false. Just like any other area of study, cash management is always in need of modernization. This has a lot to do with technology. The environment of the branches has changed, and now the needs of customers are also changing. Sales culture has taken over the banking sector and credit unions. Sophisticated technology and better cash management techniques have revolutionized this sector. Countless practices formerly took hours to complete and are now being done in a couple of minutes. In short, cash management has seen many changes.

 

As the current practices change and the world is taken over by new and improved methodologies, it is imperative for executives to understand and be abreast of the developments. This will ensure that there are no curve balls thrown at them and there are no unpleasant surprises at the end of the day. This helps in cash unions to efficiently utilize resources, predict the needs of customers and discover new opportunities for increased revenue. Understanding the needs of the customers as well as the demands of the organization will help in furthering the targets and goals set for medium to large time periods.