Small Businesses Losing £2.5bn Due to Cash Payments
Time and money lost by cash-taking small businesses is reducing profits by up to £942 a year
A recent poll of 500 small businesses shows that the overhead costs in taking cash payments is amounting to £2.5bn because of the combined financial and time impact cash handling entails.
The report revealed that 56% of small businesses take cash, with 10% only operating through cash and cheque – even though this is costing companies approximately £942 a year (the average small business’ takings for two days).
The study showed that on average these companies spend 12 days counting cash and travelling to banks. Along with the bank charges that result from paying in cash at the bank, 32% of the cash-handling businesses employ at least two people to count cash regularly.
Claire Aggarwal, owner of a mobile beauty business, added her experience as a small business owner dealing solely with cash payments:
“One of the most frustrating things for a small business is having to rely solely on cash and cheques. As a mobile beauty business, we used to take up to 20 payments a day in cash, which meant we had to carry a lot of it around before we could get to the bank, and then wait around to pay it in.”
Narik Patel, a director at PayPal UK (who commissioned the research), commented on the hidden costs highlighted in the findings:
“Many small businesses only allow customers to pay with cash because they think it’s a cheap way to get paid. But our research reveals that the hidden costs of cash really add up. And that’s before you consider the sales you lose through turning away customers who want to pay by card.”
For information on how to incorporate card payments into your small business, take a look at our sister site Startups.co.uk’s mobile card payment advice piece here.