While many customers have become accustomed to paying with debit or credit cards, there are still plenty of businesses that run on cash only. Even though this strategy can make it tricky to please consumers who may not have cash on hand, it can certainly benefit smaller firms in the long run.
The benefits of accepting cash only
Some business owners may feel they're required to offer their customers credit, debit and even mobile payment options to be successful, but that certainly isn't the case, especially among entrepreneurs running small enterprises. Limiting accepted payments to cash can still prove to be profitable, despite the popularity of alternative transactions, and has many benefits.
Simplicity draws business owners. Rather than setting up the systems needed to permit card payments, those smaller firms that choose to accept strictly cash just need to invest in some currency counters and cash drawers before they're ready for business. The ease of accepting cash only is a huge benefit to many business owners looking to take this route, according to OnMilwaukee.com.
Limited fraud concerns. Keeping track of multiple payment methods can be time consuming and put a new startup at risk of fraud. According to the U.S. Small Business Administration, fraud risk is much more common among enterprises that accept credit, debit and electronic payments. While the risk of counterfeit currency remains, the chances of a business being substantially hurt by fraud are lower when it takes cash only.
Immediate transactions. According to the National Federation of Independent Business (NFIB), accepting cash only allows a business to better track its profits, know exactly what it has made at the end of each day and have all its transactions accounted for. Rather than waiting for credit card payments to clear, company owners will have the advantage of having all payments taken care of immediately. This could prove to be a huge benefit to a new startup, especially if it needs finances on hand to take care of any unexpected expenses.
No transaction fees. Retailers pay a small fee for each transaction a customer completes with a credit card, which can make it financially difficult for smaller businesses to accept these payments. The NFIB noted having a cash-only policy eliminates these concerns.
Even though having a cash-only operation seems risky in today's credit-driven world, it can prove to be beneficial for smaller firms. A loyal client base may disregard any concerns about not being able to use their cards and embrace their local cash-only business. The one thing a retailer needs to be concerned about? Having a cash management system that allows them to keep track of all transactions and record daily profits efficiently.
March 25, 2013