Pros and Cons of Running a Cash-Only Business
A lot of people may love the idea of running a cash-only business because there’s a lot less to worry about. However, the truth is that running a cash-only business may not be as simple as you might like to think.
Although it may get you out of some administrative tasks, it can also create more challenges. Before you make your decision, take a look at some of the pros and cons of starting your own cash-only business.
Pro: Less Financial Processes
When someone buys something from you, it’s a very simple process with cash only. They give you cash, and the transaction is done. When you charge people using a credit card, you have to deal with the payment processor and often cumbersome steps that follow. Bookkeeping becomes much easier when there’s only cash to worry about.
Con: Frustrated Customers
A lot of people don’t carry cash around all the time. Unless you have an ATM machine in your store, people may get angry if they can’t use their credit cards. Statistics show that customers prefer businesses that accept a wide variety of payment forms rather than only one.
Appealing to your customers should be a priority as a business, so think about whether cash only may wind up frustrating more people than making them happy.
Pro: Fewer Chances of Fraud
When you run a cash-only business, employees can still take advantage of you and commit fraud. Although there are still some risks with cash, there may be more opportunities for fraud with payment processors.
Someone may use a fraudulent payment method electronically, which could create real problems for you as a merchant. Remember, cash is something that must be handed to you in person. Although counterfeit bills exist, it’s less common than fraud transactions online.
Con: Missed Opportunities
Beyond just frustrated customers, there may be customers that will flat out walk out of the store if you only accept cash. When you limit the number of forms of payment that you’re willing to accept, you’re potentially missing out on opportunities. It’s important that you consider whether the risk of turning business away is worth it.
Pro: Faster Closing Procedure
When closing out your store at the end of the night, it can be a long process having to count your till in addition to your credit card receipts. When you’re only dealing with cash during your closeout, it’s considerably faster. Although your till may be slightly off with cash, it’s usually not by much unless something has gone unusually wrong.
Credit card receipts can lengthen the process and potentially stress you out. Beyond closing duties, cash makes tracking and calculating your income and expenses a much simpler process overall.