Have you ever been to a business establishment only to find out that they are cash only?
If you’re that person who never uses cash (guilty), it can be incredibly frustrating when you’re trying to pay someone but they aren’t making it easy.
Now think of this from the perspective of a business. How many cash only businesses are shooting themselves in the foot without even realizing it?
Why Businesses Choose to Be Cash Only
One of my first clients, when I started my business coaching practice, refused to accept credit cards in his business.
His reasoning? He didn’t want to pay transaction fees on client payments.
While transaction fees can be a pain, they are a necessary evil if you want to make money.
Here are 8 reasons why your business shouldn’t be cash only.
It’s an accounting nightmare.
One of the main reasons why your business shouldn’t be cash only is because it can create an accounting nightmare.
It’s more difficult to keep track of cash than it is to use online payment processors.
Cash can get lost. Period.
Cash can get co-mingled far more easily with personal money. This can make things extremely difficult come tax time.
Cash can go unaccounted for accidentally. It also makes it difficult to keep track of who paid for what and when.
Cash doesn’t automatically get loaded into your accounting software so you’d have to waste time by inputting information manually.
The truth is there are just far too many things that can go wrong with cash which makes it not even worth the headache.
It’s a security risk.
While some would argue that accepting credit cards and doing your accounting online means you open your business up to security risks, I would argue the same is true for being cash only – especially if you have an office or a brick and mortar location.
There are things you can do to keep your accounting and client information safe online. You can do two-factor authentication. You can change your passwords periodically. You can even hire someone whose sole purpose is IT security.
On the other hand, there’s very little you can do to make sure the cash that’s stowed away in your office or home remains safe. It doesn’t take much for a criminal to notice patterns, and you get broken into all that money would be gone.
It wastes a lot of time.
The beauty of accepting payments online via different methods is that is saves a lot of time.
If you’re dealing with cash only, you’ll have to go to the bank all the time to deposit the money. You’ll have to do this for several reasons including keeping the money safe and paying your bills.
You don’t even have to go to the bank to deposit checks anymore. You can simply deposit a check from the comfort of your own home via a smartphone. Last time I checked, you can’t deposit cash from your phone.
Additionally, as I already mentioned, cash doesn’t get automatically added to your accounting software so someone would have to input the data manually.
Quite frankly there are far better things you and your bookkeeper could be doing with your time than manually inputting data into your accounting software.
You can’t pay your bills with cash.
As I just mentioned, business owners can’t pay their bills with cash. Payroll is done with checks and business services are paid for automatically via ACH transfer or credit card payment.
Since this is the case anyway, doesn’t it make more sense to just have client payments directly deposited into your bank account?
Otherwise, you either have to go to the bank all the time or, if you can’t make it to the bank on time, you may miss a bill payment.
Bing cash only can lead to a big mess of cash flow problems for the simple reason that so many extra steps are required to get the money in the bank.
You’ll lose money.
Perhaps the most important reason to avoid being a cash only business is that you’ll likely end up losing a ton of money.
Are payment processing fees annoying? Yes.
However, you can shop around for better rates on processing fees.
More importantly, it’s better to lose a small percentage of a payment to processing fees than to lose an entire client or customer payment because they don’t have cash.
Times are changing.
Just like you can’t pay your bills with cash, it’s unlikely that your clients and customers will be paying with cash as well.
This is especially true in a time when we’re using P2P payment platforms and cryptocurrency like BitCoin. While they may not be mainstream for business yet, it’s really only a matter of time.
People may prefer debit and credit cards.
Additionally, some people prefer to use credit cards or debit cards because it either helps them keep better track of their expenses or they want points and rewards.
Speaking from the perspective of a customer, I find both to be true. I don’t have cash unless I absolutely know I’m going to need it, like for tipping a valet.
The reasons are simple. Cash tends to disappear from my wallet faster, I can’t track what I’ve spent money on and cash doesn’t give me rewards I can later exchange for cash back or free flights.
Your job as a business owner is to make it as easy as possible for people to pay you. If you can’t do that then you run the risk of losing money.
You don’t have useful data at your fingertips.
Being able to process payments digitally gives you important data that you may not be able to get with cash.
For example, you can quickly pull up the information to see who still owes you money. Or, you can determine who will be more likely to pay you again based on past behavior.
Since you can’t really track cash in the same way, you miss the opportunity for useful data that can grow your business.
Final Thoughts
While cash is still king in many cases, that mostly just applies to cash sitting in the bank. Don’t be one of those business owners that makes their lives and their customers’ lives more difficult by not accepting multiple forms of payment.
