With the implementation of its smart safe and store treasury initiative, the treasury team at Casey’s General Stores was able to quickly resolve a myriad of issues, leading to significant increases in efficiency and cost savings.

The AFP Treasury Case Study series is designed to help you build up key treasury capabilities and skills by sharing examples of how leading practitioners have tackled challenges in their work and the lessons learned.

This case study is based on the Pinnacle Award entry from Casey’s General Stores. Casey’s is the Grand Prize Winner of the AFP 2023 Pinnacle Awards.

Insight: A fully scalable bank-agnostic solution can facilitate a standardized and consistent process across many locations and streamline treasury and back-office processes.

Company Size:	Large
Industry:	Retail
Geography:	United States
Topic:	Payments Strategy and Execution

Background: General Information About the Company

Casey’s General Stores is the third largest convenience store chain, operating in the U.S. with 2,550 stores in 16 states across the Midwest and South. The company employs approximately 45,000 people, and its annual revenue for 2023 was $15.1 billion.

Challenge: The Work or Difficulty Treasury Had to Address

Casey’s antiquated branch banking model was draining valuable resources, exerting a profound impact on both store operations and the Store Support Center (SSC).

Store Labor Costs

• Over 1.7 million labor hours were consumed annually on treasury-related tasks, equating to $25.5 million in expenses. 
• Store managers found themselves engaged in time-consuming activities such as daily deposit preparation and driving to branch banks to make deposits and pick-up change orders.

Operations

• Complex shift-change procedures, substantial time spent counting and handling cash, and the preparation of end-of-day books added to the operational inefficiencies.
• The stores produced 675,000 deposit slips annually (costing approximately $90,000). Additionally, they had $3 million in annual cash shrinkage, process inconsistencies and a lack of transparency in cash management inside the stores.
• Proprietary deposit slips had to be completed, with hard copies mailed to a third-party check processing service, incurring an additional annual cost of about $36,000.
• The company also faced data storage challenges with approximately one terabyte of data, and they were relying on a home-grown bank reconciliation application.
• Ongoing repair and maintenance of company-owned safes amounted to around $380,000 annually.
• An estimated $20 million in cash was locked up in store branch banks with limited visibility and access; the balance was known only once a month during the monthly closing process. This lack of transparency extended to daily store cash on hand, encompassing cash volumes and the mix of notes and coins cycling through the process.

Store Support Center (SSC)

• The SSC was faced with the daily task of opening mail, scanning, indexing and uploading approximately 115,000 pages of bank statements annually.
• Monthly bank reconciliations numbered 2,345, with associated annual bank fees reaching $2 million for store branch banks.
• The treasury team grappled with the ongoing administration required for bank compliance, managing approximately 3,000 overdrafts annually, and responding to daily banking-related inquiries and requests from stores. Three full-time equivalent treasury staff were dedicated to maintaining daily branch banking and relationships, in addition to performing reconciliations.

Approach: How Treasury Addressed the Challenge

After thorough process mapping, time studies, business case development and an RFP process, Casey’s made the decision to implement a smart safe program. Prior to the implementation of the smart safe and store treasury initiative, various challenges plagued the store and its support system. The implementation of the smart safe and store treasury initiative aimed to address these issues comprehensively, ushering in a more efficient and transparent financial management system.

The treasury team’s approach was four-pronged and included equipment selection and configuration, implementation of self-service change ordering, implementation of new store processes, and implementation of new SSC processes.

• Equipment selection and configuration. Casey’s upgraded to an under-the-counter smart safe model with tube vend, replacing traditional safes to save space. The new model is equipped with dual-note acceptors that provide provisional credit the moment notes are validated, detect counterfeits and ensure redundancy if one should break. Two primary note cassette configurations were selected based on cash volumes and seasonal needs. Customized software and digital interfaces streamlined operations by minimizing keystrokes, reducing cash handling, enhancing point of sale (POS) integration, strengthening loss prevention and simplifying end-of-day accounting.
• Self-service change ordering. Stores now self-service change orders through the eCATS system, which connects with the cash management software platform. eCATS is tailored to Casey’s needs in terms of change order volumes, mix and limits. Change orders are transmitted from eCATS to the vault and dispatched for delivery by the armored courier service on the scheduled service day.
• Implementation of new store processes. The introduction of smart safes led to the creation of new, comprehensive operational procedures covering installation, PIN access setup, change orders, note acceptance, tube vend operations, cash removal, POS synchronization, shift changes, reserve vault management, auditing, troubleshooting and end-of-day book preparation. Over 45,000 team members underwent training for these procedures during the initial rollout, highlighting the importance of change management.
• Implementation of new store support center (SSC) processes. Casey’s achieved scalability by replacing the legacy bank reconciliation application with a new tool within the cash management module of the ERP. This tool performs daily "match-n-kill" reconciliation of all transactions with a single click, utilizing data feeds from the cash management software for smart safe transactions and a BAI file from the bank. The new process ensures automatic reconciliation of smart safe to bank, aligns cash on hand at stores with POS and general ledger, and provides real-time visibility into store operations, armored truck service status and change orders.

Outcome: What Came of Treasury's Efforts and What Was Learned

Casey’s adoption of a fully scalable, bank-agnostic solution that facilitated a standardized and consistent process across all stores — supported by a single smart safe platform and armored courier service —streamlined store treasury and back-office processes.

By May 2023, smart safes had been successfully installed in all 2,550 Casey's stores.

Labor: This implementation resulted in a significant reduction in store labor, with six hours per store per week saved. From this, 5.25 hours contributed to scheduled labor reduction, positively impacting operating expenses, while the remaining 45 minutes per store per week were allocated to enhancing the quality of the guest experience. The annual labor savings amounted to $10.4 million, translating to a 41% reduction in store cash handling expenses.

Banking: All 900 branch bank accounts were eliminated, resulting in an annual savings of $2 million in bank fees. The real-time visibility of store cash balances by denomination, along with daily reconciliation of bank activity and the general ledger, ensured accuracy and transparency in financial management.

Treasury: The automated reconciliation and transactional "match-n-kill" process the team developed seamlessly integrates from smart safe to bank to general ledger, thus achieving a 98% automatic match of transactions in real-time. Casey's gained immediate (next day) access to provisional funds, thus improving working capital and enhancing financial flexibility.

Operations: Leasing smart safes eliminated ongoing repair and maintenance costs and, along with it, the need for third-party check processing, significantly reducing deposit-related cash shrink and improving cash and loss prevention controls. Further:

• The utilization of a single platform partner ensures a standard and consistent process across all stores. And the integration of change order management directly through the smart safe provider, as opposed to a bank, enhances efficiency and streamlines operations.
• The equipment selection was tailored to fit Casey’s business model and physical space under the POS counter.

Considering the anticipated net benefit per store and approximately 37 million shares outstanding, the EPS accretion from Phase 1 is estimated to be about $0.01 per share. This directly translates to a tangible increase in shareholder value.

The treasury team at Casey’s believes that the attributes and concepts embedded in their solution are transferable and can be adapted to enhance efficiency and effectiveness in any retail treasury operation with a POS system that accepts cash as a tender type.

Future Outlook

Phase 2 of the project involves the integration of POS, which is expected to yield a further labor reduction of 2 to 4 hours per week per store, contingent on its impact on the end-of-day books process. The resulting labor savings is expected to be in the range of $4 to $8 million annually. The cumulative reduction in labor associated with store treasury tasks and related record-keeping would reach 56% and 72%, respectively, with an additional reduction in cash shrink of $800,000.

Phase 3 will optimize change orders and courier services. With the capability to monitor cash and coin volumes, note cassette capacity at service times, and the frequency, volume and mix of change orders, the team can make informed decisions regarding the best courier service frequency for each store. This data-driven approach will result in cost savings for the program, allowing them to evaluate and manage change orders centrally, relieving stores of the responsibility.

Additionally, daily provisional credit and real-time visibility of store cash will enable the team to forecast cash, enhance working capital management and optimize returns on invested cash more accurately. At the same time, they plan to evolve and mature their loss prevention controls and processes for enhanced security and efficiency and integrate a TMS system.