Running a cash-only business might seem like a simple, hassle-free way to do things because you won’t have to deal with card machines, transaction fees, or any tech issues. But although it might seem like a great idea at first, and it might feel as though you’re saving money, the truth is that sticking to cash-only operations could be costing you more than you think and not just in terms of money, either – you might be missing out on a lot more. With that in mind, keep reading to find out what some of the hidden costs of cash-only businesses are so you can make the changes you need to make to improve your business’s profits and reputation.
Missed Sales Opportunities
Perhaps the most obvious downside to being a cash-only business is the fact that you’re not going to be able to sell anything to customers who don’t carry cash – and unless what you’re offering is absolutely unique and absolutely a must-have, they’re unlikely to go to the trouble of finding an ATM, withdrawing cash, and coming back to you to buy whatever it is they wanted. Instead, they’ll just find it elsewhere and use their credit card or phone wallet.
As you can see, if you only take cash, that’s going to really reduce your customer numbers because unless someone happens to have cash on them already (and the number of people who fall into that category is dwindling all the time) or they know in advance that you’re cash-only and therefore make sure they’ve got cash on them, they’re going to go away disappointed.
Inconvenience For Customers
Customers expect flexibility when it comes to payments, and a cash-only policy can frustrate anyone who prefers (or only has) digital payment methods. Remember, it’s not just about the money, it’s also about the entire customer experience, and if you’re not giving people what they want, that experience isn’t going to be a good one.
If you can offer a wide range of payment options, including using a mobile card reader for your phone, that’s going to make life easier for your customers, and in turn that’s going to make business better for you.
Security Risks
Of course, handling large amounts of cash can come with its own set of risks, which could include everything from theft to accounting errors – the fact is that cash-only businesses face a lot of security problems and challenges that other businesses won’t necessarily have to deal with. Plus, you’ve got to keep going to and from the bank to deposit the money, and that’s time-consuming and potentially risky as well.
When you offer digital payment options, you’re reducing your risk massively because the money goes straight into your account – as long as your cybersecurity is up to scratch, there shouldn’t be any problems. And if you do still take cash but offer other options, you’re likely to find that only a small number of people pay cash, so you’ll have to go to the bank a lot ess frequently.
No Online Option
People love to shop online – it’s easy, quick, and convenient, and with a few clicks, they can find just what they’re looking for whenever they want, order it, and have it in their home in a matter of days (or even hours). That’s why most businesses will offer some kind of online store, even if it’s only a booking system for services – their customers are going to want to use it a lot of the time, and that goes for online only businesses as well as those with a brick and mortar shop to take care of.
If you only want to deal with cash, that option is off the table because the only way for a customer to pay online is using a credit card or a digital payment system like PayPal, for example. You’re effectively limiting your reach even more than before if you aren’t going to take cards because you can’t have an online store.
And if you think it’s not necessary because you want to deal with people face to face and don’t want a website, what about last minute purchases? Those items you put by the checkout for people to impulse buy? If you only take cash, and they’ve got a set amount in their pocket, those impulse buys might not happen anymore.
Tax Problems
Managing cash might seem easier, but it can get very complicated when it comes to taxes – with digital payments, everything is logged and every transaction can be seen and traced, saving you a lot of hard work, but with cash payments, you’ve got to keep meticulous records, and that’s not always easy.
Either you’ve got to spend a lot of time working out your accounts or you’ve got to employ an accountant to do it for you (who’ll probably charge extra to deal with cash). Either way, it’s going to be more of a chore to avoid audits, penalties, or even legal trouble when you’re cash-only.