Pub. 2 2013 Issue 8

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 20 SECURITY OFFICER’S BY-WORD CASH SHORTAGES By DonaldM. Towle, President Kansas Bankers Surety Company C ASH SHORTAGES ARE A SERIOUS AND growing problem in banking today. But the problem, which is extremely serious and expensive in some banks, does not seem to exist in other banks. In an effort to find the reason for the wide differences between problem and non-problem banks which otherwise seemed similar, a careful study was made of the cash shortages trend in banks. The following factors were considered in the evaluation of the banks in regard to their cash shortages: • Teller salaries • Teller turnover • Teller training methods • Lobby traffic patterns • Lobby vs. drive-up tellers • Number of transactions handled • Geographic location of the bank • Urban vs. rural banks • Large, medium, and small banks • Day of the week • Month of the year • Cash handling procedures • Attitudes of bank management • Education level of tellers • Male vs. female tellers We were able to find a correlation between poor salaries and turnover, but not between poor salaries and cash shortages. There was a correlation between teller errors and lack of training, and turnover, but cash shortages were less than other teller errors. We found that large urban banks as a general rule paid tellers less than rural banks paid their tellers, but there was no significant difference in cash shortages between urban and rural banks. No day of the week had significantly more cash shortages, except Mondays. However, when the fact that many banks carry over Friday evening and Saturday teller transactions to balance into Monday’s business was considered, Monday cash shortages did not stand out over any other day of the week. Two factors did show up significantly in the study. The month of the year and the attitude of bank management are very important factors in the number and amount of cash shortages that any bank will suffer. Month of Year Cash shortages are significantly higher from November 1 to the end of the first week in January. That time period has held true for many years. There are more cash shortages in banks during that 10-week period than in the balance of the year combined. We were unable to prove any reason for that period of time to stand out the way it did. We can only speculate the need for extra cash at Christmas time might be the reason. Management’s Attitude The attitude of bank management turned out to be the real key to the amount of cash shortages suffered by banks, both large and small, urban and rural. In banks with excessive cash shortages, the attitude of bank management was in whole or in part as follows: • “Everyone makes mistakes.” • “Our tellers do a good job considering the amount of cash that they must handle.” • “The owners will not allow us to pay good salaries, so we have to expect more errors in cash.” • “Accurate, careful tellers are just not available in today’s market.” • “We expect too much of our tellers now.” • “We are just one big happy family here.” • “Strict cash handling rules and procedures create unhappy employees and more turnover.” • “We don’t want our employees to feel that we do not trust them.” • “We trust our tellers.” • In banks with little or no cash shortages the attitude of bank management was, in whole or in part, as follows: • “We will not stand for excessive teller offages.” • “We have not had a cash shortage of more than $100 in over three years, that we could not find.” • “When a teller is out of balance, everyone stays until the money is found.” • “We dismiss any teller who has too many cash shortages.” • “We check every transaction until the money is found.” • “We are just as concerned about overage as shortage because it means that a customer was shorted by our bank.” • “Teller bonuses are related to their accuracy in our bank.” • “We were short $300 one time in the last year and we think we know the person who got the money. The customer kept the savings withdrawal ticket and denied ever being in the bank on that day.” • “We are proud of our teller balancing record and everyone is working very hard to maintain the record.” The conclusion of the study is that the cash shortages in any bank will rise to any amount that the bank’s management considers normal and tolerable, whether that amount is $50 per year or $50,000 per year. The real key to less cash shortages is the attitude of management, not the accuracy or quality of the tellers. For more information, please give us a call at (785) 228-0000.