Counting the Hidden Cost of Cash
- Cash costs SMEs seven million business hours a week, and £39m in lost change a year
- 47% of people prefer to pay by card – but three million SMEs rely on cash transactions
- Sahar Hashemi, entrepreneur and best-selling author, urges small business embrace new technologies to future-proof their businesses
Research out today from Square reveals the hidden cost of doing business in cash for the UK’s small businesses.
Small business owners dedicate a collective seven million business hours a week at the bank dealing with cash – 81 minutes a week per business. And with 3,300 bank branches having shut since 2015, it’s harder than ever for them to carry out basic banking services in their local area.
Cash is also costly when it comes to loose change, with a quarter of consumers said they would never own up if they got too much change. On average, respondents would take up to £2.35 before letting the business know, mistakes that could be costing small businesses up to £39 million.**
The research comes on the back of the changing nature of the UK high street – one in 10 shops are lying empty on the high street – the highest rate in four years, and the economic uncertainty of Brexit. Despite these shifts and the costs of cash handling, over half of the businesses (54%) surveyed still don’t accept cards, putting themselves at risk of missing sales.
Whilst small businesses spend time cashing up and traveling to and from the bank, consumer habits are changing fast. With 488 ATMs closing per month on the UK’s high streets, cash can be hard for shoppers to access and spend.
Nearly half of Brits prefer to use their cards (47%) over any other form of payment, compared to only 30% who prefer to pay by cash. In fact, that preference for paying by card rises as high as 56% among the next generation of shoppers aged 25-34.
Entrepreneur and best-selling author Sahar Hashemi OBE comments,“By meeting changing customer demands and streamlining the way we do businesses we can make sure Britain’s small businesses don’t get left behind.Our collective focus is on empowerment and ensuring the right technology is in place to be smarter and faster.”
Offering card payments can help businesses to attract more customers, cut time at the bank and even manage cash flow better. Overall businesses that have adopted card payments have seen their profits increase by up to 25% However business owners believe that the cost of taking cards outweighs the benefits. Business owners were put off taking cards because of monthly fees (39%) or signing contracts (23%).
Helen Prowse from Square UK said: “There’s so much to think about when you are running your own small business and accepting digital payments may not be top of your list. However, it is easier and more affordable than you might expect.
“Operating as a cash-only business is fast becoming an unsustainable business model. We want to help business owners better understand the hidden costs of cash and the benefits of accepting card payments, so that they do not get left behind.”
One business leading the way when it comes to technology is Coaltown Coffee founded in the ex-mining town of Ammanford, South Wales. Coaltown Coffee founder Scott James started the business from little more than a barbeque and parts from a Ford KA.
He now sells his roasted coffee beans to over 200 wholesale customers and from his humble beginnings in his garage at home, Coaltown Coffee has since opened its vast, iconic roastery space, complete with café and production facility.
Scott understood the importance of adopting a modern approach to payments. But in an area where most people still used cash to make their purchases, Coaltown Coffee needed a payments partner whose products would make the transition to cashless easy for customers. Scott reflects on Square’s crucial role: “For this local area it was a new approach. Square allowed us to really push for contactless payments on cards and smartphones. I think that made it much easier for customers to switch over and use these more modern payment solutions. Small businesses should never feel scared of taking card payments.”
Card payment solutions are now available which no longer require monthly fees or contracts, and offer predictable rates across all debit and credit cards. For more information visit squareup.com/uk