For any atm business to flourish properly,  the ATM business owner needs to have a solid understanding of cash flow and finances. In my 13 years of experience, I’ve seen TOO many atm companies with the inability to scale their growth. Why you ask? Well, many individuals that get into the atm business come from a sales background. The ability to network and provide free atm placements are a knack for some (and I’ve seen some amazing pitches occur in real time with a close – with locations that do thousands of transaction a day!). But they one part that atm owners forget is the importance of managing cash flow.

One atm machine: $2000
ATM Installation (outsource) : $350
Maintenance Call : $75
Phone Line: $20/mo

Thats about the extent of most atm owners spreadsheets. Ah… I know many of you with any sort of financial sense sees the disasters here. The cost of money… regardless of the economy, needs to heavily be thought about. If any atm needs 25k a week, you have interest cost and armor car cost. If you dont have a full grasp on these two variables, your company will not grow and survive (you will get to a point that you can not grow anymore, and for that sales guy, it will kill you personally!).

This brings me to the investment opportunity. ATM companies will offer an outside investors 15-20%  returns. Now, in the present world of Madoffs, you look at that number and become skeptical. While this is smart, with some understanding of the atm business, you can see how you can mitigate this risk while earning a hefty return.

Scenario:
ABC ATM is looking to secure 100k in a cash loan @ 20%.
XYZ Investor if highly interested, but demands the following (which will help you mitigate the risk).

1. The cash can ONLY be used for vault cash purposes, not for hardware. Extremely important
(Your cash is always liquid and never tied to a depreciating asset).

2. XYZ Investor initially shout be of a portfolio that uses armor car services. Why? Accountability. Cash being delivered by armor car gives the Investor protection against internal theft (you’re dealing with cash people, and lots of it!)

3. If armor car is not an option, ask the ATM owner to provide insurance on the atm machine. Now, this is where things get tricky. While this seriously lowers the risk for the investor, its an added expense (sometimes hefty) to the atm owner. Chances are the atm owner will now do this (as from a portfolio standpoint, its actually cheaper for an atm to be stolen than insure every highly profitable machine)

4. An atm owner will ask that you keep your money with the company for X years. They will also ask to provide Y months before removing your cash.  An investor will have a hard time to get around this, as the atm owner needs to know that the cash is there for him to grow. If you are ok with these types of  terms, then the investment is well worth it

5. Contingency: My favorite contingency surrounds non payment. In your contract, have a clause that states if the ATM owner does not provide interest or principal payment within Z days of due date, Investor has rights to surcharge / interchange revenue. Now, not many times will this be executed, but having this as an option protects you in the future. After all, contracts are in place in the event of failure.

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