There are few more guaranteed ways to start a debate in a cash centre than to mention header and trailer cards. To the casual observer this may seem a rather dry subject – after all cash centres just process cash don’t they? But, as with so much else in life, the devil is in the detail. The methods used to process cash are fundamental to lowering overall operating costs and it is vital to understand the method most suited to your operation. Far from being a one-pass process as commonly advertised, in fact header cards entail three or more processes that make it a less efficient process than the two stage processing it claims to beat.
First things first, what do I mean by header cards? To understand this let’s think about the workflow in a cash centre. Cash is received, normally from retailers or banks, and is counted, sorted by denomination and fitness, and moved into the vault.
Each customer naturally needs to have the correct balance credited to their account, and any discrepancies must be tracked and readily identifiable. Otherwise the cash centre ends up bearing the loss.
Header (and trailer) cards are an attempt to speed up this process, by removing the need for an initial count of the money. Instead multiple deposits can be amalgamated, separated by header cards that denote individual customers. The cash is run in a single pass on a note sorter and any discrepancies are reported in a separate reconciliation process.
So where are the drawbacks? On the face of it header cards make sense. You get to run your banknote sorter uninterrupted and you can keep track of individual customer balances. However, there are hidden issues that reduce the benefits considerably, and more often than not remove them altogether.
1. Increased reject rate
Header and trailer cards are always sent to the reject pocket, alongside any rejected banknotes. It is this that enables accurate reporting of discrepancies as the rejected notes can be allocated to an individual client account. But reject rates are something that machine manufactures try to minimise, as a high rate reduces overall processing capacity. If there are only 100 notes in the batch, the header and trailer cards will guarantee an instant 2% reject rate, plus any rejected banknotes. This problem is obviously at its worst when dealing with small retail deposits. In commercial cash centres these small retail deposits can account for 70%-80% of overall volumes so is a significant issue.
2. Improved customer service
The traditional two-pass method, where notes are counted and reconciled at a desktop workstation before the notes are bulked up for fitness and denomination sorting, is a highly visible process. In the age of ubiquitous security cameras, every action is recorded and the entire process from the bag being opened to the notes being counted can be shown to the client in the event of a dispute. With header cards this visibility is lost, and the client has to take any reported difference on trust.
3. More complicated end-to end process
If there are no rejects it is a relatively quick process to close the batch, in fact many systems do this automatically, unhappily though this is seldom the case. There are many reasons that a bank note may be rejected; it may be a counterfeit, it may be folded in half, it may be physically damaged in some way, but the likelihood is that a large proportion of batches will need further inspection, especially with retail deposits. The result is a team of people employed to sort through the piles of header cards looking for rejected notes that they have to manually inspect and reconcile.
Far from being more streamlined, header cards actually add to the complexity of the workflow. It is important to consider all elements of the operation when comparing a one-step process with alternatives, as most attention is usually focused on the banknote sorter, where it can appear more efficient to run all deposits in a single pass. I know of clients that have dropped the header card process and while they have increased staff in certain areas such as deposit processing, this is more than compensated for by the reduction in people engaged in reconciliation – an overall FTE saving of 10-15% is achievable.
Header cards may have their uses where cash centres are dealing with relatively few batches with high note volumes, but that’s not in fact the profile of work that faces many commercial organisations today.