Unlocking Efficiency in Cash Reconciliations

In October 2020, Casey’s General Stores formed a treasury function for the first time. The chain of around 2,650 convenience stores primarily serves smaller, rural communities. “We were founded in Boone, Iowa, in 1968, and we are proud to be a critical resource for the communities we serve,” explains Eric Larsen, Casey’s treasurer. “In many of those communities, we are the only local source for groceries and fuel.”

This business model means Casey’s does a lot of business in cash. By the time the company wound up its treasury department, its scale had made management of bills and coins a significant business challenge.

“When we would open a store in a smaller town, we would need a bank account nearby so that the store manager could deposit our physical cash and get change orders back to the store,” Larsen explains. “Our only option might be a small community bank because everything needed to be done locally. In total, at one time, we had 2,345 accounts at 890 different bank branches. We had a cash-sweep process to our main concentration bank, but the central store support center in Iowa would need to process statements from all those individual branches.

“They were mostly physical statements that came in the mail,” he continues. “To do the reconciliation, we would have to open those statements, then scan and upload them into a centralized database. We were uploading around 115,000 pages of bank statements and other artifacts every year.”

This not only demanded a lot of staff time, but also limited the new treasury team’s visibility into cash companywide. “The dependence on paper statements meant that we were effectively a month behind on our reconciliation, because of the time it took us to process them,” Larsen says. “It’s a challenge just to open that much mail every month, much less to get all the accounts reconciled.”

Another inefficiency with the company’s legacy approach was that store managers were spending a total of more than 1.7 million hours annually on treasury-related tasks, including driving to and from the local bank to make deposits and retrieve change. The extensive hands-on management of cash also resulted in a significant amount of what Larsen calls “cash shrink,” as bills disappeared from stores. And it made store managers prospective robbery targets as they conducted their daily deposits.

All these factors combined to convince Larsen and his team that they should look into alternatives for closing bank accounts and streamlining in-store treasury activities. Smart safes emerged as a solid solution. “We did a lot of benchmarking of other best-in-class convenience store operators, as well as other retailers generally,” Larsen says. “And we talked to our banks about best practices. The smart safe idea came together from a business-case perspective as a result of those conversations.”

Once they decided to use smart safes and selected a provider, the team created new, standardized processes for stores to use nationwide. They defined an automated reconciliation process, built integration among four different source systems using APIs [application programming interfaces], and developed their own reconciliation software to manage data flows between the applications. They performed physical on-site surveys at each store and completed any work necessary to prepare the store for its smart safe device. They developed a field training program that educated about 45,000 employees and created call center protocols that covered troubleshooting and escalation of any issues with the safes. And they launched a six-month pilot project at 24 stores to prove the program’s efficacy.

This complex initiative involved more than 40 Casey’s team members, and the final smart safes were installed more than two years after vendor selection started. As a result, the smart safes have transformed Casey’s treasury operations at both the store and corporate levels.

Now, rather than going to the bank, store employees load cash into their smart safe at specific intervals throughout the day. The bills run through bill validators, and the safe counts the bills and change. A small, predetermined amount of cash goes into one section of the safe, which employees can withdraw from when opening the store the next morning. All additional cash deposits go into a separate section of the safe, which is accessible only to Casey’s armored car company. The smart safes also have space for the store manager’s request for change from the bank.

“When a team member opens up the store for the day, there is no cash in the register,” explains Jon Beckham, Casey’s IT controller. “They withdraw cash from the smart safe, which provides the amount and denominations they need. They put that money in their register and transact normally. At the end of their shift, they deposit all the notes back into the safe. It will do the counting for them, and it’s going to be an accurate count every time. Then it will provide them with a slip of paper confirming how much they deposited.

“When the armored carrier comes in, they sign off for the cash they remove from the safe and for the change order, if there is one,” Beckham continues. “That transaction is automatically recorded and tracked, so it can be reconciled back to the bank account to make sure the amount that came out of the safe is identical to the amount deposited in the bank. We can also perform periodic audits of cash on hand, making sure the balance we have on our balance sheet matches the physical count and amount in the safe.”

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This process streamlines cash management at the local level, but it has had an even more dramatic impact on the centralized treasury team. “Our new reconciliation process takes data points anytime money is moving into the safe, from the safe to the bank, from the safe to the register, etc.,” says Ben Lewenczuk, Casey’s assistant treasurer. “Our ERP [enterprise resource planning] system automatically imports all those transactions and accounts for them appropriately according to transaction type.”

This gives Casey’s management far more timely access to working capital information. “Before the smart safes, we didn’t have visibility to how much cash was inside a given store until the monthly reconciliation, and even then the data was weeks in arrears by the time we calculated it,” Larsen says. “We can now reconcile every store on a daily basis, to see not just the amount of cash in that store, but also the denominations of the cash. The custom-built reconciliation tool is extremely powerful.”

The smart safe provider’s provisional credit model further benefits working capital. It gives Casey’s next-day access to funds deposited in each safe, even though the armored carrier typically picks up only weekly. Larsen estimates that this capability increases the company’s available capital by about $20 million.

In addition, Larsen adds, “those automated data flows create enormous efficiencies compared with our prior process of opening mail, manually reconciling bank statements, and then posting to the ledger.” Casey’s has been able to reduce staff time in each store by 5.25 hours per week, which totals about $10.4 million in annual savings on labor costs companywide. And the fact that most cash inside each store is locked in a safe, which even the store manager can’t open, improves security by minimizing the appeal of robbing a Casey’s location.

Finally, because the cash is physically moved from place to place by the national armored car company, the new process enabled Casey’s to consolidate bank accounts and banking relationships. It no longer needs a local account for every store, so a final step in the initiative was to close over 2,300 bank accounts. This has resulted in more than $2 million in savings on annual bank fees.

The benefits are profound, but Larsen and his team are not resting on their laurels. “This is just the start of what will be a multiyear evolution that will continue to generate additional savings as we integrate the smart safes with our point-of-sale system, further optimize the change order process, and make other improvements,” Larsen says.

“We picked the right smart safe partner, so we had good support on the ground as we rolled out,” Larsen concludes. “We also were very intentional about getting the recipe right before we took off. I get sweaty palms thinking about what life was like three years ago, when Casey’s didn’t even have a treasury department. This is a great first win for treasury, and it has been well-received. We talk about it on our investor calls. Everybody understands the value that we’ve unlocked.”