How Cash Impacts Your Business in 3 Key Areas: Administration, Customer Satisfaction & Access to Finance
Cash has been knocked off its throne. Today, regardless of your target audience’s age, data indicates that most consumers want the option to pay with a debit or credit card. Irish consumers now spend more using cards than they do using cash, namely €7,442 on the former versus €5,388 in cash withdrawals. Beyond the obvious benefits, how else does this impact your business for better or for worse?
Handling & Administration
There is a misconception that card transactions are the more expensive method of payment. In fact, cash handling costs are estimated at 2.5 cents per euro of turnover, compared to 1.6 cents for a card transaction. Combine that with the estimated 28 minutes per day in back office administration time versus 94 minutes for cash, there are material soft and hard savings to be made. By making a deliberate effort to increase the amount of card payments over cash, retailers could save thousands annually on cash handling costs, while also reducing the risk of fraud and simplifying time intensive administration.
Digital payments and till systems help Irish retailers to become more efficient and automated, while also accessing data and insights into their business; allowing for better and more informed decision making. You do not need to be a large retail chain to automate your accounting and inventory control, or to offer digital loyalty programmes to encourage card usage and return visits.
Customers are becoming less likely to carry cash meaning despite the quality of your products, your service, or the extensive marketing you have done to get the customer there, if they are unable to pay, they will go elsewhere. There is less of a psychological constraint for people to part with their money when they use cards, and they are more impulsive when compared to using cash. Retailers can use the decreased price sensitivity customers tend to have when paying with a card to upsell the most profitable items or make POS impulse purchases easier.
Studies indicate that customers view the appearance of a line negatively—regardless of how quickly it is moving. For those customers with a limited amount of time, waiting means their departing experience is negative and stressful. Cash payments slow down even the most adequately staffed counter and as queues build, and staff attempt to compensate with speed, room for error increases dramatically.
Access to Working Capital Finance
Cashflow is a key indicator and determinant of a business’s ability to access finance, however there are finance products that put specific emphasis on the volume of revenue being generated through cards. Cash Advance facilities allow retailers to access working capital finance by leveraging the strength of their card sales. The more volume of revenue that runs through the card machine, the larger the working capital facility a retailer can access. Repayments are made daily using a portion of what comes through their card machine. By encouraging card over cash sales, a business owner can directly influence how much finance they can access and how quickly they can pay it back.
Author: Andrea Linehan, Commercial Director GRID Finance
GRID Finance is an Irish owned provider of business finance. GRID’s Cash Advance Facility is a short-term finance solution specifically designed for the retail sector. It works with your business and its existing credit debit card machine. You can borrow up to €500,000, repayments are made daily as a small percentage of your future card sales until you have repaid the full amount.
The GRID Cash Advance product allows retailers to access working capital finance by leveraging the strength of their card sales. Its purpose is to work with the natural ebb and flow of the retailer’s trade, something that fixed monthly term loan repayments can work against.