While it is true that cash is the simplest form of payment, it’s not always the best form of payment for small businesses. Here are the cons of accepting only cash, courtesy of the U.S. Small Business Administration (SBA):
- If your customers don’t have the cash to purchase an item they want from your business, then they are more likely to walk away from the purchase.
- Keeping a large sum of cash at your business can put you at an increased security risk. It can also increase the amount of time you will spend at your business managing finances because of the time it can take to count cash and change.
- Credit cards and debit cards are very popular; in fact, most people only carry a small amount of cash or no cash at all. Because of this, being cash only can cause your business to lose both existing and potential customers. A cash only policy can make them feel inconvenienced and cause them to take their business elsewhere.
- Being cash only can mean you will need to do additional paperwork come tax time. The SBA states the IRS requires businesses that receive more than $10,000 in cash from one buyer in a single transaction, or two or more related transactions, to file a Form 8300. This same rule applies to cash equivalents including traveler’s checks, bank drafts, cashier’s checks and money orders. The form does require that you have your customer’s name, address and social security number.
To learn more about the advantages of accepting credit cards, visit www.northamericanbancard.com.