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One major challenge agents face is running out of cash to service their customers withdrawal (cash out) requests. Here we discuss this challenge and some tips to manage this.

Liquidity management is the ability of an agent to systematically make the most of, manage and prioritize the dispense and utilization of cash in your location. Many agents still fall short of basic cash liquidity management techniques, hence they run out of cash early in the day.

  • Good agents should take the time to decide the maximum value per transaction that they choose to handle (i.e how much they can pay out for a single transaction). Some agents have pegged their max to 10,000 while others do as high as 50,000. If the transaction amount is more than this, they split it into 2 transactions and charge double fees.
  • Good agents should take the time to project how many single head transactions must be carried to be profitable for a day’s business. For example, If you decide the maximum amount per transaction is N5,000, and you need to do 100 transactions to be profitable, then you need to have 
  • Good agents should take the time to project what the cash demand will be in their location. 
Once these parameters are known, they will serve as a guide as to how much cash at hand is needed on a daily basis. 

  1. Be proactive in predicting your cash needs through the understanding of your market conditions - and plan/prepare ahead for days when you will have high cash needs. High cash need days/periods can be market days, salary payment periods, festive seasons and harvest seasons.
  2. Avoid big ticket transactions that would consume all working floats that are usually poorly priced. This will hamper your liquidity and create a situation where your services will suffer.
  3. Target small transactions which are usually more profitable and give you latitude to attend to more customers. For example, performing a single N100,000 transaction would command at most N2,000 commission however, the same N100,000 can perform 20 transactions at an average transaction value of N5,000 that would command a minimum commission of N4,000 (at N200 commission fee per transaction).

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