Top tips on taking cash payments: Pros, cons and processing


When you're running a small business, you need to think about what's the best payment system for your needs. Should you go for online payments, get an eftpos system, stick with good old cash payments or offer all three? Here's a quick look at cash payments, the advantages, disadvantages and other tips that'll help make your business payments more efficient. 

Benefits of cash payments

Allowing cash payments for your goods and services has several benefits. Check out these examples:

  • Privacy

    Cash payments don’t automatically leave records. Customers may prefer cash payments when buying private goods or services, such as pharmaceuticals and medical services.
  • Convenience

    Cash doesn’t require authorisations like typing in PIN codes.
  • Reliability

    Cash payments are possible in locations without electricity and aren’t vulnerable to technical problems, such as broken EFTPOS machines.
  • Low setup costs

    Unlike other payment methods, cash payments don’t have the set up costs of payment methods like online payments and EFTPOS. However, you still need to consider the potential cash handling and labour costs associated with taking cash.

Disadvantages of cash payments

Processing cash payments isn’t free. It costs money because of labour costs, service fees and losses due to theft. Check out these examples:

  • High labour costs

    If you receive lots of cash, labour costs are high. You have to spend a lot of time and money on activities such as counting cash, bookkeeping and banking.
  • High risk of theft

    Cash has a high risk of theft. Cash is hard to identify and there is no automatic record if someone steals it. Because of this, cash sales can attract thieves. Both employees and non-employees can steal cash.
  • Risk of counterfeit and fraud

    There is a risk of receiving counterfeit cash, that is that it looks like cash but is not legal Australian tender.
  • Small service fees

    There can be small service fees for banking when processing cash payments, although this depends on your bank or financial institution.
  • No automatic proof of payment

    There is not automatic proof of payment if someone pays in cash. This can make resolving disputes difficult.

Processing cash payments

Cash payments are useful for low value items or if other payment methods are unreliable. To process cash payments, follow these example steps:

  1. Let your customers know the total cost for the goods and services they want to buy. If you display or advertise prices, it is an offence under the Australian Consumer Law if you supply your goods or services for more than the lowest advertised price. Read our Pricing and Pricing regulations pages.
  2. Receive the cash from your customers.
  3. Give your customers change if they overpay.
  4. Provide your customers with a receipt and/or a GST tax invoice if they request one. If GST is applied, you must provide a GST tax invoice within 28 days if your customer requests one.
  5. Keep your cash stored securely. A Cash Register is often used to ensure only authorised people can access it and can help you record your sales transactions.
  6. Bank the cash at the end of a sales period. During banking, it is a good idea to make sure you have enough change for the next sales period. Banking can earn interest and help protect your cash from theft. Read the Banking page on the SmartMoney website to learn more about banking.

Using and storing cash

You may decide to accept cash and other payment methods depending on your type of business. When using cash, there are certain things you should do to ensure you and your employees can manage cash effectively. These might include the following examples:

  • Set up a cash register system

    This can help you keep the cash secure when you’re running your business. It can also help you keep track of your sales.
  • Install a safe on the premises

    This can help secure your cash.
  • Install security cameras

    Cameras can help you deter theft and other illegal activities. They can also assist in resolving cash handling disputes, such as whether you gave the correct change.
  • Train your employees

    It's important to train your staff on cash handling procedures, including the reconciliation of cash and storing cash securely. This training may be part of your customer service training and include how to manage customer disputes over cash.
  • Segregate cash handling duties

    If you can, it's a good idea to have separate employees record sales, authorise payments and have access to your business’ cash such as in your bank or safe.

Tips when taking cash payments

If you allow cash payments, try these tips:

  • Regularly bank cash

    Regularly banking cash reduces the risk of theft. If you need to store cash on premises, make sure you store it securely, such as by using a safe or security cameras.
  • Avoid large cash payments

    Avoid receiving large amounts of cash. Storing large amounts cash increases the risk of theft.
  • Use cash if other payment methods are unreliable

    Use cash payments if your business operates somewhere that other payment methods are unreliable.
  • Allow cash payments for private goods

    Cash payments are more private. Allow cash payments if you sell goods or services that may embarrass customers, such as medications.
  • Don’t send cash through the mail

    There is a high risk of theft if customers send cash through the mail. If you need to organise payment to or from someone remotely, consider other payment methods.
  • Train your staff on cash handling procedures

    Make sure you have documented your internal procedures for handling cash and that your employees are trained in the procedures.

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