Cash is king – but is that the case in the post-pandemic world and should you only take card or cash?
Covid-19 has changed how business is being carried out across the world. Studies say it’s unlikely the virus is transmitted through cash transactions, many businesses have banned them.
But what’s best for your business? Should you ditch cash payments forever or will they always be a big part of your operation?
This guide will help you decide and look at the pros and cons of card and cash.
In the world we are living in, fast-paced transactions are appealing to customers, which makes card payments attractive. It’s a quicker experience for the user and makes banking easier. There’s no money to count and there’s less time needed to process it.
Credit and debit cards are also more secure than cash. Also, fraud protection is built into every card.
Many credit companies also offer protection for authorised transactions. You are protected when buying something that doesn’t arrive from the supplier. In this case, you can file a dispute to get that situation resolved. That’s something that isn’t possible if you pay with cash or cheque.
Credit and debit cards make accounting easier. Accepting cards means you have almost perfect records of every transaction and every penny you have received. In contrast to using cash, it is unlikely that you will have missing money and the risk of human error and time wastage is minimised.
There are many people who still like to carry cash. It feels safer to them, they’re in control and perhaps less likely to spend too much. Having physical money can help when it comes to them budgeting.
One of the biggest advantages of accepting and using cash is you control your money. You always have immediate access to funds. After someone makes a purchase, the money is immediately available for business expenses or to be kept safe for future expenses.
Card transactions usually require some time to reflect in your account, and in that time, you might miss a crucial payment, be unable to purchase inventory or pay your employees.
If you receive a lot of cash regularly you will need to deposit this into your bank and the location of your nearest high street bank plus the time taken to go in branch need taking into consideration. Card payments don’t require you to make this trip.
Cash can be problematic for your bookkeeper or accountant as you will need to keep records of what customers paid you in cash and what you spent in cash unless you have receipts, but not all shops give you receipts these days. Can you remember what you spent every penny on?
Card and cash
There are costs associated with both cash and card. Every credit card swipe comes with a transaction fee that can be as high as 3 per cent of the transaction. However, banks can charge up to 1.5% per £100 cash you deposit. You’ll have to weigh up the costs of each based on how much cash you would normally receive monthly versus the monthly value of credit card transactions.
Card transactions mean that your accounts are more accurate. You can then analyse your costs and income in more detail. Cash relies on receipts or your memory to be able to record these transactions in your accounts and inevitable something will get missed. Therefore, the data isn’t as accurate as it should be and you might not realise how much you’re actually spending on certain items because it’s not being recorded.
So what should you do? If accepting cash isn’t a problem and you’re not concerned about the processing times, it’s definitely something to keep open to customers. It keeps you in control and allows flexibility of funds. However, if you want accurate accounting records and be able to identify where you could be saving money then card payments are more beneficial.
Clearly, offering both types of payments means that you won’t be putting off any potential customers and clients. And with the advent of smartphone payment, such as Apple Pay and Google Pay, physically buying in shops is a lot easier.