What Business Owners Need to Know – Cash is King?

How many times, as a business owner have you heard, or read that cash is king. I’ll bet you that it was a lot of times. However, we’re now really busy doing business during the 4th industrial revolution. After all, is that enough reason to discard cash to the history archives?

Maybe we should first ask our customers…

What is Cash?

Cash is such an everyday part of our business and our being that we’ll probably never have paused to think about what cash really is.

According to Wikipedia, cash is, from an economic perspective, money in the physical form of currency, such as banknotes and coins. On the other hand, sees a bookkeeper cash as current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately.

So, the cash in its petty cash box is mostly the most liquid current asset a business can have.

Advantages and disadvantage of doing business with Cash

Meredith Wood of Keap.com mentioned the following pros and cons about accepting cash in your business:

Advantages of Cash sales

  1. You have immediate access to funds. Accepting cash means that you have the money made from a transaction immediately. Yet, if your customers pay with a card, there’s usually a delay before you can access the funds. Also, with cash you’ll have immediate control about what you want to do with the money. If the money is paid directly into your account, you’d sometimes have to depend on a third party to clear the amount.
  2. No costs. If you receive cash from clients, there are no cost. This is unlike when a customer pays with a card, where each transaction is charged a fee. Even more, the equipment to record a card transaction also carry a cost to the business owner.

Disadvantages of Cash Sales

  1. It may be a security risk. Keeping a large sum of money on your property may increase the chance of running into trouble down the road. A large amount of cash in your register puts your business at risk for a theft.
  2. The bookkeeping is complicated. Imagine you’re handed bags full of banknotes and coins – the day’s takings. Then the reality, it’s seven o’clock in the evening, you’re alone in your shop. But that’s not all, you need to sort the notes and coins, count them and write them up. Yuck! A messy job indeed…
  3. Costs when banking cash (eBizplan). The cost with cash business comes when you carry the money bags to the bank and pass them to the teller. Yip, you get charged a nasty fee for the teller to count the dirty notes and credit your bank account with it. Even more, most service providers will charge you a fee when you want to pay them with cash…

Is Cash really King?

I think want we need to ask is… Does cash serve a real purpose for the buyer and does it add value for the seller? We had a hard look of what cash business does for the business owner. But what about the buyer (your customer)?

What buying with cash means for your customer?

Mansur Khamitov writing in The Business Times ask this rhetorical question “Is cash really king?”. Interesting of this piece is the angle from ‘the customer’s perspective about using cash’, that the narrator takes. Indeed, Mansur reports that research showed that for many consumers paying in cash is more painful than paying with less tangible forms like credit cards.

However, even more bad news for business owners is that customers paying in cash, instead of cards, helps them to spend less money.

How common is cash still used nowadays?

In spite of all the advancements in payment technology and payment apps, cash is still widely used by many people who had to get on with their lives. Just think of all the waiters, cleaners, casual laborers and part time workers receiving their pay in cash.

In fact, in some developing countries such as India, only 8 per cent of the population use accounts at financial institutions to receive wages (The Business Times). Even more, social grants are also paid in cash for those who wish so, here in South Africa.


Is cash king? I wonder if the corona virus has finally decided the fate of cash? I mean, used banknotes and coins are dirty. And the virus can occupy any surface, for too long…

But I suppose for most of us there’s no alternative but to do business in cash. Indeed, if your customers carry only cash, well then you need to accept their cash!

My thoughts are with you during this extraordinary, devastating times…

Read also: The Joy of Shopping


Feature image: Pexels


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