Handling cash is weighing heavy on small businesses. Not literally, but in terms of time and resources. Use of cashless payment systems is growing, but cost is a barrier. How can firms invest in new technology while safeguarding working capital?

New research from the Post Office reveals the extent to which small businesses still use cash and the demands that this is putting on them as a result. According to the survey, firms spend over three weeks a year on cash-related admin, such as counting cash and taking it to the bank.

This is a significant amount of time and there is an argument that it could be more efficiently spent. There is also the question of safety, with the survey also finding that small business owners that handle notable amounts of cash often delay banking takings, keeping cash either on the premises, at home or on their person.

Cash vs cashless: key payment trends and future-proofing operations

So, the answer is going cashless? Well, that’s not how small businesses see it. While one in seven high-street shops has gone cashless over the last year according to a study from Link, the Post Office data shows that seven in 10 see regard cash as essential.

As such, it is clear that a balance is critical. Older and less tech savvy customers remain dependent on using cash, with these groups representing a key income stream. According to the Post Office research, almost 30% of payments received by small businesses are in cash and nearly 60% of firms would struggle if they switched to cashless.

Nevertheless, it is just as clear that a greater integration of cashless systems would generate important efficiencies for small businesses, not least as the move away from cash continues, with 78% of 16-24 year olds and 73% of 25-34 year olds using mobile payments at least once a month according to UK Finance. The cost of systems is a key obstacle to such development.

How alternative lenders can help with cashless payment system investment

That cost is a factor behind small business hesitancy towards investing in cashless payment systems is hardly surprising given the impact of prolonged market uncertainty on profit margins. Finding the money for investment is difficult, which is not helped by continued caution from traditional banks regarding small firm lending.

This is where alternative lenders can help.

Alternative lending solutions, such as invoice finance, asset finance and peer-to-peer lending, have become funding lifelines. For example, asset finance is being commonly used means for buying vehicles, machinery or equipment, while invoice finance is being employed to manage staff costs and, more broadly, to cover costs while income catches up.

Overall, by offering a more accessible, cost-effective and personalised approach to lending, these alternative finance facilities are helping small businesses navigate the current climate and target greater stability and growth.

Small business options for financing cashless payment investment

The latest research on the use cash is an eye-opener for small businesses. Yes, there is a clear demand for its continued use, but the tide is moving undoubtedly towards cashless payments. Firms have to manage the shift, in order to maintain sales and operational efficiency, and this means investment.

Given the current economic environment and ongoing caution from traditional banks, it is important that key decision-makers are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.