Many small business owners agree that the most valuable activity they do is accept money. Without it, all other marketing activities are irrelevant. It is the lifeblood that keeps your business open. Building relationships is essential, but if your business doesn’t have a healthy stream of capital rolling in, you’re destined to close your doors.
The use of cash machines and debit and credit cards has exploded across the national financial and retail landscape over the past decade. With the recent development of e-commerce, you might think that plastic is the currency of choice, but that’s not the case entirely. Cash still accounts for the majority of all sales and is the most commonly accepted and reliable form of payment for a business. Despite the explosion of online commerce and electronic banking, paper checks are a close second to cash. In fact, paper checks account for nearly three-quarters of all noncash transactions in small businesses.
However, checks can present challenges, such as delaying payments because they have to be processed through at least two banks before funds are available. Also, paper checks lower productivity because they require paperwork, and they can be, and often are, fraudulent. Of course, this cut profits and increases costs.
Accepting Cash and Checks
Businesses and financial institutions have worked to merge paper checks with the electronic payment process, resulting in electronic checks. Both businesses and financial institutions find that electronic checks are highly beneficial for profits and productivity. While you can choose to accept any form of payment that works best for you, some factors to consider include:
The methods you choose to collect money reflect a simple rule: The easier it is for your customers to pay you, the better it is for the success of your business.
It All Depends
Choosing to accept cash and checks depends on the type and size of your business, the number of customers and employees, and the average cost of transactions. For instance, you probably won’t need to accept cash if you primarily work with large companies instead of retail customers. Likewise, a small business that sells low-dollar purchases mainly to the general public probably won’t need to accept purchase orders because they most likely don’t have an accounts receivable department.
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