Cash is No Longer King
Before the “Cash is King” brigade jump on me, let me clarify: I’m not saying cash is dead. Far from it! There will always be a place for cash—especially for sole traders and those running side hustles from home. But for the vast majority of businesses in the UK, cash is no longer king. Cashflow is king! Why? Because while cash is great for buying your morning bacon roll or hiding down the back of your sofa, it just doesn’t cut it when running a modern business. Let’s dive into why embracing card payments is critical and why holding onto cash might feel like clinging to an old VHS player in a streaming world.
The Decline of Cash
Once upon a time, cash ruled supreme. But times have changed, and the Queen’s head on a £10 note isn’t the force it used to be:
- In 2023, cash payments accounted for only 12% of all transactions in the UK, down from 14% in 2022 (Reuters).
- In contrast, card payments dominated, making up 61% of all transactions (Reuters).
- Of these, contactless payments—whether by card or mobile—rose sharply, comprising 38% of all payments in 2023 (Reuters).
Translation: more people are tapping their way through life, while cash is sitting in a drawer somewhere, sulking.
The Rise of Card Payments
Consumers love convenience. And card payments are the ultimate “I-don’t-want-to-think-too-hard-about-this” option.
- Tap-to-pay technology is booming. As of July 2024, 34% of UK consumers used mobile contactless payments (like Apple Pay and Google Pay) at least once a month (Financial Times).
- Debit cards lead the charge, accounting for 51% of all payments, with credit cards following.
Let’s face it: people are lazy. If they can pay with a phone or tap their card instead of rummaging for coins, they will. Who wants to fumble around at the till like they’re auditioning for The Crystal Maze?
A Snapshot of UK Business Demographics
To understand the broader picture, consider the composition of UK businesses (March 2024, Office for National Statistics):
- Sole Proprietors: 14.6%
- Companies/Public Corporations: 75.6%
- Partnerships: 6.1%
- Other Legal Forms: 3.7%
This means the vast majority—85.4%—of UK businesses are structured as entities that typically require a business bank account, making card payments essential for streamlining transactions and improving their professional image.
Why Cash is Expensive for Businesses
For businesses, cash isn’t as “free” as it may seem. In fact, accepting cash comes with hidden costs and risks:
Bank Deposits
Unless you’re lucky enough to have no fees or a special deal, depositing cash into a bank can be more expensive than card transaction fees. Many banks charge per deposit or impose percentage-based fees on large sums.
Security Concerns
Handling large volumes of cash increases risks of theft and necessitates higher insurance costs, especially if you hold over £500 on-site. Transporting cash to the bank? That’s another layer of risk.
Time Costs
Trips to the bank to deposit cash can eat into your day, especially for sole traders or small teams where every hour counts.
The Psychology of Spending: Why Card Payments Drive Higher Sales
Research shows that consumers often spend more when using cards or digital wallets compared to cash.
- A study published in the Journal of Retailing found a significant “cashless effect,” where individuals spend more with digital payment methods than cash (StudyFinds.org).
- Data from Capital One Shopping reveals that digital wallet users spend 12.8% more on average than debit card users and 51.1% more than cash users (Capital One Shopping).
Why? Paying with cash feels more tangible—it creates a “pain of paying” when you hand over physical money. Card and digital payments, on the other hand, feel effortless, which encourages people to spend more.
Real-World Success: A Local Café’s Transformation
Let me share a story of a small café in Dumfries (we’ll keep their name under wraps for privacy). They were cash-only for years, even though there were ATMs just across the road. Some customers dutifully withdrew cash to pay, but many simply walked a few doors down to a competitor that accepted card payments.
After introducing a card machine, the café saw an instant 20% increase in turnover. Over the following months, that figure continued to climb as previous visitors realised they now took card payments and started returning.
Their average transaction value (ATV) for card payments also jumped by 15–20%, and card transactions now make up 70% of their turnover, resulting in an overall increase of about 50% in total sales. Not bad, eh?
Why Cashflow is King
Cash might have its uses (like vending machines and car boot sales), but cashflow is the lifeblood of any business, and here’s why it reigns supreme:
Business Expenses Are Paid Digitally
Most business expenses can’t be paid in cash. Imagine trying to pay your supplier with a wad of £20s—you’d be laughed out of the room. Rent? Needs a bank transfer. Business rates? You’ll need cash in your bank account, not under your mattress. (Don’t get me started on paying by cheque—what is this, the 90s?)
Staff Payments Are More Efficient Digitally
Sure, some businesses still pay their staff in cash, but for most, this is about as practical as using carrier pigeons for email. Paying wages digitally:
- Saves time. No need to count out bundles of notes.
- Reduces risk. Less cash on-site = fewer headaches.
- Keeps staff happy. They’d rather get their pay straight into their account than trek to the bank to deposit it before paying their bills.
Cashflow as a Driver of Business Success
Still not convinced? Consider this:
- 82% of business failures are due to poor cash management (ForwardAI).
- 94% of UK small businesses experienced at least one month of negative cashflow in 2021 (Xero).
- And let’s be honest: scrambling to make payments while cash sits uselessly in a till is a recipe for stress.
Cashflow isn’t just king—it’s the full-blown monarch of your business.
Solutions to Cashflow Challenges
Thankfully, modern payment solutions are here to save the day (and your sanity):
1. Faster Settlement with Card Payments
With solutions like Red E Pay, your card payments can land in your account as early as 6 PM the same day or 1 AM the next morning. No more waiting for cash deposits to clear or chasing late payers. Faster settlement means fewer grey hairs and more time to focus on growing your business.
2. Merchant Cash Advance
For businesses accepting card payments, a Merchant Cash Advance is like a superhero for your cashflow. Need funds? Forget bank loans that take weeks to process. Advances can often be approved and funded within hours. Perfect for emergencies, growth opportunities, or just keeping the wheels turning.
Pro Tip: Ask us about Merchant Cash Advances—we’re happy to explain how they work.
3. Improved Financial Management
Digital payments make your life easier. Automated tracking, detailed reports, and simple reconciliation mean you can spend less time on admin and more time doing what you do best—running your business.
Why Card Payments Make Business Sense
Card payments don’t just help with cashflow—they open up a world of opportunity:
- Impulse Purchases
Customers are more likely to splurge when paying by card, as they’re not limited by the cash in their wallet. It’s the difference between a pint of milk and leaving the shop with snacks, magazines, and maybe even a new kettle. - Customer Convenience
Nobody wants to walk out of your shop and find a cash machine. If they can’t tap to pay, they’ll probably head to your competitor who takes cards. - Reduced Admin
Reconciling cash can feel like solving a Rubik’s Cube. Card payments, especially with tools like Red E Pay, make it as simple as a few clicks.
Don’t Overpay for Card Machines
If you’re thinking, “My card machine fees are too expensive,” it might be time for a free review. At Red E Pay, we offer cost comparisons to see how much we can save you. More savings, less hassle—that’s what we’re here for. Contact Us
The Bottom Line: Cashflow is King
Cash may not be king anymore, but it’s certainly not dead. It will always have a place—like in small transactions, tips, or paying your mate back for lunch. But for most businesses, relying on cash alone is about as useful as a chocolate teapot.
Healthy cashflow is the true monarch. It ensures smooth operations, helps you seize new opportunities, and keeps your stress levels manageable. By embracing card payments and focusing on your cashflow, you’re setting your business up for success in a world where convenience is key.
So, is cash still king? Not anymore. Today, cashflow rules the roost—and card payments are the key to unlocking its full potential.
Ready to future-proof your business? Red E Pay offers fast settlement, secure transactions, and unbeatable support. Don’t let cash (or cashflow problems) hold you back. Get in touch today!
