The State of Cash in 2024
Despite the prevalence of digital payment methods, cash continues to play an important role in many customer service businesses. According to a survey commissioned by Pew Research, 59% of Americans say that in a typical week, at least some of their purchases are paid for using cash.
The truth is, cash is a universal payment method that provides optionality to consumers. Cash usage has been stable since 2021, further underscoring the notion that cash is here to stay. Americans with lower incomes continue to be more reliant on cash than those with higher incomes, according to Pew. Cash also remains a critical payment option for customers who do not have access to credit cards or mobile payments. Roughly 30% of households with incomes below $30,000 a year say they use cash for all or almost all of their purchases in a typical week.
So, how do business owners navigate the opportunities, challenges and management of cash?
Opportunities of Cash
There are many opportunities when it comes to cash. The primary one being that cash provides a straightforward, immediate form of payment without the need for digital infrastructure. Because cash doesn’t require technological support, transactions can still occur during internet outages or when digital systems fail, and businesses can avoid the fees associated with credit card transactions, which cost approximately 2-3% per transaction, and other forms of digital payment. Some merchants have even opted to provide clients with discounts if they pay with cash to reduce the associated POS fees. Additionally, handling cash can aid in managing daily earnings and expenditures more directly and visibly.
Challenges of Cash
While there are opportunities that come with cash, there can also be challenges. Handling cash increases the risk of theft, both externally and internally. Depositing cash at the end of the day also raises additional security concerns as someone has to safely transport the cash from the business to a bank. This not only involves security concerns, but additional time and logistical planning. Combine this with preparing cash deposits and reconciling cash receipts with sales records, and you are looking at additional overhead for your business.
Cash Management Solutions
There are solutions that can help you manage your cash in a seamless and efficient manor.
One of the best ways to increase operational efficiency and minimize risks in handling cash is by partnering with a provider of cash management and smart safe services. Utilizing cash automation services such as smart safes, cash recyclers and kiosks can help you resolve many of the challenges associated with handling cash, such as streamlining counting and sorting, reducing human error, enhancing internal controls by tracking cash movements and employee interactions with cash, and significant time savings.
How do know if you could benefit from a cash management solution?
- Consider your potential savings from the implementation of an automated cash management service by analyzing your current cash handling costs, including labor for counting and securing cash, transportation costs of getting the cash to the bank, and bank fees associated with cash processing or counting errors.
- Weigh your security concerns such as theft. The enhanced security features of cash management services may be beneficial in protecting your business and your employees.
- Analyze your staff and your time to see how much is spent on cash-related tasks and how it impacts overall efficiency. What would an additional ~4 hours of time each business day do for your business? If manually managing your cash is using significant resources or the time of employees, it may be opportunistic to implement a smart safe solution.
- Be honest with your financial management needs. Businesses that struggle with financial forecasting, tracking and reporting, and cash reconcilement might find that cash management services improve their accuracy and help ease these tasks.
The reality is, cash is here to stay! Cash management solutions provide the ability to digitize cash and eliminate the manual processes associated with accepting and handling cash payments. It’s up to you as a business owner or decision maker to ensure all forms of payments are treated efficiently and carefully as it is an asset to your business and your employees, and not a burden or safety risk.
While the world of cash management solutions can seem daunting, the first step is finding a trusted financial partner like Cash Connect, who can help you assess your needs and recommend the best solutions to enhance your business.
