One of my clients runs a construction company. I asked him a few questions: How much did you make this year? What do you expect to make next year? Where are the majority of sales coming from? How much would you make if you open a physical location?
He looked at me and laughed: “I honestly don’t know.”
This is ok, and taking a look into his financials I found the issue. His bigger projects he would spend time, writing a bid proposal, sending and estimate and an invoice. However, there were a larger volume of smaller projects where he would ask the client to pay in cash after the completion of the project. He would not provide an invoice for the transaction and would keep the cash outside of his bank account. This was a problem!
Small Businesses love taking cash. It’s easy, there isn’t any paper work involved and some businesses choose not to deposit the cash into their bank account. We believe that this is the worst way to run your business. Here are three reason why:
You won’t be able to grow your business.
Imagine getting 1,000 clients and they all pay you in cash. It would be a mess. You wouldn’t be able to remember who paid what amount, and if anyone hasn’t paid you. If you are small, it may make sense to take cash only since you only deal with a handful of clients. However, if your goal is to grow to hundreds, or thousands of clients then cash only is not the best solution.
Making business decisions are harder.
When you take cash, there is no way to assess how well your business is doing, or not doing. If there isn’t a paper trail, then opening a second location, hiring more employees, paying bills, and buying property gets nearly impossible. You need to be able to track the money coming in and going out in a system, so that when it comes to making those decisions you have data to support it.
Cash flow is a problem.
Losing track of your cash transactions can cause headaches. What if you misplace your cash, or it gets stolen? There isn’t any insurance backing it up. If you have a client issue and it forces a refund do you have enough cash to refund the client? If you start digitizing the way you are getting paid these transactions become painless. Digital transactions are harder to steal and lose track of.
We have an invoicing platform that will help your cash only problem. It is all-in-one solution and it’s FREE! Stop taking cash and start using Canasta today! Sign up for a free demo below.