Cash is often a small business owner's preferred customer payment method at the point-of-sale. Unlike debit and credit cards, there is no wait for funds and no handling or processing fees. However, there are risks of relying solely on customers using cash at your business.
Customer Attrition
One risk that small business owners face when they only accept cash is customer attrition. Some customers who prefer to use debit or credit cards for payments, or who don't have enough cash on hand to make a purchase, will leave a cash-only establishment to shop elsewhere.
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Cash Theft
A major risk of cash-only customers is theft. A dishonest employee might slip money out of a cash drawer, purposely charge a customer the wrong price and keep the difference, or give price "breaks" to customers he knows. This risk is lessened if you have a high-tech cash register system that computes how much cash you should have at the end of the day based on the number of items scanned, but it can't eliminate the risk of employee theft altogether. Also, If you store cash in an on-site safe, there is a risk of burglary. If you transport large sums of cash to your bank for deposit, there is a risk of theft during transport.
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Holiday Losses
Business owners face a higher risk from cash payment acceptance during the holidays. Distractions from long lines and customers complaining or asking questions can result in employee mistakes. In addition, if a distracted employee accidentally leaves a cash drawer open, or turns away briefly from an open drawer, a dishonest customer might grab money from it.
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Currency Fraud
Although anti-counterfeiting measures such as security strips, holograms, special inks and intricate designs on paper money and milling marks on coins have made currency fraud difficult for criminals, counterfeiting remains a problem. According to the United States Secret Service Fiscal Year 2010 Annual Report, the Secret Service removed from circulation more than $261 million in counterfeit currency in 2010 -- $79 million more than in 2009.
Lower Risks
One way to lower cash risks is to offer alternative payment methods such as debit and credit cards. Although theft still occurs, card transactions provide electronic records that make it possible to track theft. Another way to lower risk is to reduce the number of employees allowed to handle money, and only allow one or two trusted employees access to your safe. Additional methods include installing security cameras and a hidden safe, and using different routes or hiring a security firm to transfer large sums of money to your bank for deposit. You should also invest in crime protection insurance.
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Currency Fraud Prevention
The Secret Service recommends that business owners visit its Know Your Money website and study the information available. On the site, you can learn the distinctive differences between legitimate U.S. currency and forgeries, and the appropriate actions to take if you're given counterfeit currency.
