So you’ve decided to venture out on your own and start a business this year. Congratulations on taking the plunge! Along with any monetary success you might achieve, being in business for yourself comes with great personal rewards.
Whether this is something you’ve been dreaming about for years or a recent idea that’s struck, you need to make a plan before you fully dive in. When you’re just starting out there are many steps to take and decisions to be made, but none more important than how you will be paid for your products or services.
When you ask any small business owner what their number one business challenge is, you’re likely to get the same answer nine times out of ten: getting paid. This makes choosing a point-of-sale system, and the types of payments you are going to accept, some of the most important business decisions you will make.
Australia is rapidly heading towards being a cashless society and the sooner businesses ditch cash, the better off they’ll be. Here are three reasons why this makes sense.
Consumers don’t like cash
A 2018 report released by Square highlights that 81 per cent of Australians now prefer cashless forms of payment, and one in three are actually card-only shoppers who no longer carry any cash at all. This consumer preference for card payments does not come as a surprise when you consider that the average Aussie is only carrying around $50 in their wallet at any moment.
Even the recent removal of ATM fees by our big banks hasn’t seemed to sway consumers back towards cash, with the same research revealing 2.5 million Australians reported they hadn’t withdrawn money in at least four weeks, and a further 2.3 million stating they couldn’t remember the last time they even visited an ATM.
Cash has a cost too
One of the biggest myths that needs to be debunked in the business world is the very real cost of accepting cash payments. The time it takes business owners and staff to have cash ready for trading, prepare daily tills, handle cash transactions, reconcile books and deposit cash each day, can quickly add up.
In 2018, SMBs were wasting an average of 216 hours per year (that’s almost 29 working days) handling, counting and banking cash. That’s a huge cost when we consider that the minimum wage for an Australian worker is just over $18, so we could say that managing cash is costing the Australian SMB sector a minimum of $8.7 billion in annual staff wages.
This is a cost that SMB owners could instead be using to hire more staff, serve their customers better, diversify their product and service offering, or even invest in an integrated digital payments system that will refine their business processes and boost their bottom line.
Just like renting a business space or hiring employees, payments are a normal operational cost that should be accounted for — and that includes cash too. Many people think of cash as being cheaper and easier because there’s effectively no direct charge to them to accept it, therefore it must be free. This is simply not true. The fact is that cash has a very real cost to every business owner.
Cash is inefficient
There are many benefits to gain from accepting cards or digital payments in your business, including speed of use; no double-handling; no recording errors; seamless integration to your banking and accounting software; plus, a great record of customer data. These are all advantages that you lose when you’re dealing with cash.
For example, cash is anonymous, which is useful in some contexts but not when it comes to capturing all valuable customer data, such as spending habits or preferences that enable business owners to provide an improved or personalised purchase experience. Sure, if you’re using a decent point-of-sale system you can still record cash spending and hope that it’s manually entered correctly by your employees, but what about the customer profile? If gathering customer insights is important for your business, as it is many, then accepting cash becomes useless to you because it doesn’t generate this type of information without you manually chasing it.
The fact is that digital payments are now a simpler, faster, safer and more intelligent way to pay and get paid. It won’t be long until we are saying farewell to cash for good. My advice is to make sure you’re ahead of the curve when that happens.