There are several nuances of running a successful business, and of the many wheels that drive the engine, the chosen business payment method is vital to the success of every business. Most traditional businesses often prefer cash payments for their services, and more often than not, they tend to stick to this method despite the options of other business payment methods. While this might have a few advantages, it comes with several cons that might cause notable limitations to your business.
What are the Perks of Being a Cash-Only Business?
Most small business payment options focus on receiving cash alone. Businesses that choose the cash-only payment option do so for some reasons. Some of these reasons include:
- Comparatively Lower Costs
Cash-only payment systems often come with lesser operational costs compared to digital payment options. The transaction costs associated with payment with credit cards and other forms of digital payments are discouraging factors for several business owners. And this reason is especially true for small business owners who might be trying to reduce operational costs as much as possible. But is this enough to make cash-only payments the best payment option for small businesses?
Business owners who are not tech-oriented might experience some issues using some digital payment platforms. This can be a major discouraging factor for small to medium-scale business owners who find using digital payment options somewhat technical. In addition, business owners may automatically assume that most customers are not tech-savvy and prefer cash payment options. But nothing can be farther from the truth.
Due to the possibility of hacks and cyber fraud, some business owners are apprehensive about exploring alternative payment systems as they find cash payments relatively more secure. Although, there is no denying the fact that cash payments also have their vulnerabilities.
- Simple Accounting
Business owners using multiple digital payment options usually have more accounting to do per time. This is because they will have to aggregate the payments from all these platforms before preparing the accounts. However, with cash, all the payments are already in one place, and the accounting process is much simpler. Just use a bill counter or get your hands moist, and let the counting begin!
Why You Should Not Accept Cash-Only Payments
As much as the perks of cash-only businesses can seem attractive, this payment system has several disadvantages that make it less preferable. Without a doubt, cash is not the best payment method for small businesses that seek to grow. Consequently, they may want to consider other online payment methods for businesses. Here are some reasons why you should not consider cash-only payments.
- Brand Appeal
The first notable downside of running a cash-only business is the brand perception it creates for customers. Most customers see businesses that run cash-only payment systems as old-fashioned. More so, considering the vast array of convenient payment methods offered by technology. An increasing number of businesses now choose to receive payment in cryptocurrencies! This single move can make the brand seem trendy or even futuristic. If you ask me, that’s a good sign. So, yes! You have to explore other business payment methods pretty soon!
- Limited Sales Potential
Limited sales potential can present itself commonly in two ways. Firstly, when users start to perceive your business as old-fashioned, they might begin to choose other competitors with a more modern and trendier brand appeal. Apart from this, offering a vast array of payment options makes it convenient for more customers to patronize your business. Not all customers like to carry cash, and giving them cashless payment options gives them more reason to patronize your business. Studies have shown that about 9% of people do not carry any cash, while about 40% carry $20 or less. Making your business cash-only implies that you cannot sell to this set of people. And I bet you would want to sell to people who don’t take cash on them but can unload truckloads of cash via other online business payment options.
- Longer Transaction Times
One of the many advantages offered by modern payment methods is the speed with which customers can make payments. Faster payments mean a faster turnaround time at the payment point of your business. The implication of this is that customers don’t have to wait for long periods before completing a purchase. In extension, you can attend to more customers in less time, thereby improving your sales process’s efficiency.
- Increased Volume of Transaction
Cash-only businesses tend to create limitations on the volume of transactions customers carry out with your business. This is largely because there is a limitation to the amount of cash that most customers can carry around. However, with cards and other forms of digital payment solutions, customers can buy as much as they want conveniently. This helps improve the overall volume of transactions for your business in the long run.
- Customer Protection
Most digital payment platforms offer some form of customer protection systems that are not obtainable with cash-payments. Once you earn a customer’s trust, they can spend a sizeable amount transacting with your business.
- Checks Processing Time
Checks are a commonly explored alternative with some cash-only businesses. However, check processing is not always a convenient process. Apart from the tedious process associated with clearing some checks, the entire process can also be time-consuming compared to having customers pay with their cards or using other digital payment options.
- Customer Reward and Loyalty Systems
With digital payment options, you can easily keep tabs on customer performance to know your high spending customers and create a reward system based on this performance. When you reward customers for doing business with you, you increase their chances to keep doing business with you. Not to talk of the friends that they will refer! This is more difficult to do with cash systems.
- Digitized Accounting and Audit Processes
Most digital payment options available now make the accounting process of payments processed online much easier. With the right payment system and point-of-sale solution, you can conveniently generate accounting reports that would typically take much longer to process if you had to do them manually.
Accounting in cash-only systems can only be efficient for small businesses. As your business grows, exploring other payment options becomes almost inevitable as the volume of accounting you have to do is significantly increased.
Also, keeping cash within your business premises increases the risk of theft, which is not common with digital payment systems.
- Improved Access to Customer Information
With modern payment systems and point-of-sale technology, you can also access relevant customer information to make vital business decisions. From sales preferences to preferred payment options, these kinds of information would help you make the best business decisions for customer engagement and retention.
In conclusion, times are changing, and businesses need to ride on the wave of evolving technological innovations with payment solutions. Most of the emerging payment solutions are designed to ensure the optimal satisfaction of both customers and vendors. While running a cash-only business might seem appealing, the demerits of this payment system compared to modern payment options are much more. Interestingly, most of these innovative payment systems do not require any high-end technical knowledge to incorporate them into your business. From credit card payments to digital transfers, you can conveniently adopt these payment options without any hassles. Yes, it’s time for you to explore different payment methods for businesses!