The Pros and Cons of being a Cash-Only Business

Running a business is hard. Some business owners across the U.S. have been tempted to keep it as simple as possible by accepting cash only in exchange for merchandise or services. However, that up-front ease is deceptive, and it could be holding your business back from future success and expansion. On the other hand, every business is different and what is good for one business may not be good for another. Consider the following pros and cons of only accepting cash, so you can make the best decision on how to operate your business:


• Cash means immediate payment and value, so the extra step of waiting for transactions to process is removed entirely from the equation.
• Transaction fees and third parties are also eliminated. You will have cash in hand immediately so no middle men or additional processing is required.
• The chances of fraud or reversed bank transactions are vastly reduced. Counterfeit cash may occasionally come your way, but the possibility is less and less common with electronic theft offering a greater draw for high-level thieves.
• Keeping track of incoming and outgoing funds is also easier if funds are coming in through one channel. Tallying amounts from online payments, card payments, mobile payments, checks, and/or any other forms of payment (Applepay, Paypal, etc.) on top of cash payments, along with the potential for reversed transactions and fraud, can make for challenging bookkeeping and, especially, taxes. Cash only tends to simplify this quite a lot.


• Considering that about two-thirds of transactions in 2012 were conducted via payment card (debit, credit, etc.) — that number continues to increase — the biggest loss to your business if you choose to only accept cash: money. In fact, consumers estimate that 15 million businesses who only accept cash are missing out on $100 billion in sales annually.
• The average amount a consumer will spend on a transaction via card payment vs. cash payment is also a big difference. According to a CNBC article, consumers will, on average, spend up to 120 percent more through card transactions than through cash transactions. So, maybe a small sale is possible, but big ticket items are much harder to sell in a cash only business.
• Today, how many people do you know who even have cash all the time? You may have to turn potential buyers away, which is always disappointing.
• You may miss out on multi-channel marketing opportunities, such as mobile payments, online sales, etc. Yes, it’s a huge hassle to keep track of all those different forms of payment, but if more money is coming in, isn’t it worth it?
• Keeping track of large sums of money on a daily basis—and making sure you have trustworthy employees—can also be a challenge. The lack of a paper trail can make it hard to track your funds and the large amount of on-site cash may require additional hassles to make sure it’s kept safe.
• Tracking sales, keeping records, and understanding your customer base will take more time and more energy from you. While the technology required to process card payments can be obnoxious and expensive, it also has a lot of built-in goodies—if you choose well—that can help your business grow much more quickly than the old-fashioned manual way.

If your business is truly tiny, you may want to wait to invest in some of the higher-end technologies available. At the same time, a small business can grow much more quickly with all the advantages that technology, card payments systems, online marketing, etc. can provide. It may be tempting to stick to old, simple methods, but risk is a big part of business—and some risks are just worth taking.