Taking idle cash and making it available for other purposes is the idea behind Balance Innovations’ new cash forecasting capability.
CEO Darren Knipp of the Lenexa, Kansas-based company, told The Shelby Report at the National Retail Federation’s 2019 Big Show, “We’ve historically provided an operational focus solution for stores to help automate their cash management, basically to make the cost of accepting cash as low as possible. That’s been very appealing, and we can take a lot of labor and time savings out of the store so that they can reapply that toward other consumer-facing type things, whether that’s e-commerce or multi-channel delivery or those types of things.”
Supermarkets accept a lot of cash, with large retailers possibly having between $40,000 and $60,000 in cash in every store, Knipp said. Based on its research, Balance Innovations aims to reduce that cash on hand by 20 to 50 percent through its new software, freeing up those funds to be used for new capital investments or other purposes.
“So really the big story for us at this show is, based on our historical involvement with large grocers and retailers, we now can forecast demand based on their historical POS [point of sale] and other types of data across all their devices, whether that be a recycler or a safe or a self-checkout. We can help them predict how much cash they really need in the store, which allows them to turn those lazy assets into something that can produce more revenue for the store,” Knipp said. “We apply machine learning capabilities to do that. We take a look at the historical data and then, using machine learning algorithms that we’ve developed in-house over the last two-and-a-half years, we take that data, apply those algorithms and then we make educated guesses based on all that information that we have that covers billions of dollars of transactions. Given that large lake of data, we can then make a pretty accurate demand forecast that can take into account all different types of factors from seasonality to holidays to promos, all those types of things. Given that, we can then help influence the stores who are largely doing things based on decades of intuition. We can help them be a little bit smarter in their decisions and incrementally, gradually, with confidence, start pulling some of that cash out of the store, to the tune of 20 to 50 percent of their cash on hand, which is substantial for the larger retailers.”
Knipp said Balance Innovations’ new software is in a pilot phase with some of the largest retailers in the country.
“We’re seeing those types of results,” he said.
Balance Innovations can work with a retailer’s existing POS system or devices, and the software can integrate with those different systems.
“Usually, within 30 to 60 days we can have our demand forecast based on their historical data,” he said. “We can make that recommendation and then they can start pulling that cash out incrementally. It’s a very quick solution that really doesn’t require a lot of things except some confidence in the data that they’re seeing and then some procedural changes in terms of how you start pulling that cash out and putting it to work.”
The system is all cloud-based and may be operated through a mobile device or laptop. Knipp said the return on investment (ROI) can be realized in a matter of weeks.
“When you look at the cost of cash, if you’re talking 56 stores, on average there’s $30,000 of cash in that store, depending if they have self-checkouts it could be a lot more. So then you take that $1.5 million and take 20 percent of that; you’re talking $300,000 kind of right off the top they could pull out in 30 to 60 days,” he said. “So the ROI is very rapid.”