How Much Is Cash Handling Costing Your Business?

Cash handling is a necessary part of doing business, with cash payments unlikely to disappear completely anytime soon. However, your cash management systems could be costing you a significant portion of your income in the form of labour costs and shrinkage.

Having an accurate picture of how much you are paying for cash management is essential for taking the next step to improve processes and reduce shrinkage. At the end of this article, you’ll find a formula for estimating how much you are spending on cash handling. But first, let’s identify the areas where waste is occurring.


Traditional cash handling is a largely manual process that is highly labour-intensive. In fact, Australian businesses spend an average of 216 hours per year handling, counting and banking cash.

And the labour cost is not only based on wages. Those are 216 hours that you and your employees could be spending on more important tasks to effectively grow and manage your venue, such as business development and customer experience.


Cash handling can also cost you money in the form of shrinkage, which refers to the loss of inventory and profits due to reasons such as theft, fraud, lost or damaged goods, and administrative errors or “paper shrink”.

While all aspects of shrinkage should be addressed, traditional cash management systems particularly lend themselves to administrative errors.

Calculating the cost of administrative errors in cash management is a bit tricky. Not only does this include any lost money from the mistake itself, but there is also the cost of fixing it, often calculated in payroll hours as managers chase down the source of the discrepancy. But to put things in perspective, administrative errors, in general, cost Australian businesses a combined total of $7.8 billion per year.

When interviewed, Daniel, CFO of West HQ agreed that cash shrinkage, overall, can probably add up to around 1% of cash takings when cash handling processes are manual.

‘Before we automated cash counting, cash shrinkage accounted for a small amount every week. However, there was one occasion when a material amount of cash went missing, and it was not traceable, due to the manual nature of our process. This significantly increased the average – and that, plus the exposure of cash in the safe and our wage bills made it necessary to invest in a cash recycling solution,” says Daniel.

While accidental in nature, there’s no reason administrative errors can’t be prevented by establishing more efficient and effective cash management systems in your venue. And as an added bonus, effective solutions are likely to reduce other forms of shrinkage related to poor security.


Hospitality venues that establish the following best practice cash management systems will likely see a decrease in their cash handling costs.

  • Tight processes and procedures
  • Staff training in cash handling
  • Modern equipment and technology
  • Increased visibility and tracking

In particular, cash recyclers are changing the face of the hospitality industry by providing secure and accurate automation of cash management processes. This includes functions such as accepting and dispensing cash, sorting and counting coins and notes, authenticating currency, and providing real-time reconciliation, tracking and reporting on venue cash flow.


You can do a rough calculation on the cost of handling cash in your venue, using the tables below.

Manager’s cash handling activities:

On average, how many hours do managers spend on the following each week?

Task Hours Hourly Wage Cost (hours x wage)
safe counting and balancing
Float prep
Reconciliation of floats at shift end x number of shifts
Discrepancy investigation
Bank reconciliation
Cash audits
Daily reconciliation

Cashier’s cash handling activities:

On average, how many hours do cashiers spend on the following each week?

Task Hours Hourly Wage Cost (hours x wage)
Float verification
Gaming pay-outs
Reconciliation of floats

Administrative errors:

Type Number
Average number of administrative errors in cash handling per week
Cost of fixing administrative errors (time spent x worker’s wage)
Total cost of error (average number x cost of fixing)
Discrepancies even after errors
Total cost of administrative errors (total cost of error + discrepancies after errors)

Then, assuming you’re accounting for even a 1% shrinkage, calculate 1% shrinkage on your cash takings and add this to your calculations. Does the overall yearly result surprise you?

If you’re interested in talking to us about cash recycling solutions, contact us today.