When starting a business, choosing a payment method is an important decision. In France, there are many options to choose from. Among these, cash payment is one of the most common. While credit payments have many advantages, cash also has clear benefits. It’s an easy and effective way to simplify transactions. This article will help you decide by outlining the benefits of using cash.

What’s in this article?

• What is cash payment?
  
• What methods are considered as cash payment?
  
• What are the advantages of cash payment?
  
• What are the disadvantages of cash payment?
  
• Businesses and cash payment
  

What is cash payment?

Paying in cash means covering the entire purchase cost in one transaction. It’s the simplest, most direct way to pay for something. The customer gives money to the seller and immediately receives the item. This approach is the easiest for both parties.

Cash payments are instant, unlike credit transactions which are spread out over several months. Additionally, there are no hidden fees or unexpected costs at the end of the month.

What methods are considered as cash payment?

Cash payment is an immediate transaction in which the buyer gives money to the seller in exchange for a product or service. This can take place in several ways.

Procedure

Whether in a physical shop or online, payments made by cash, cheque, or e-wallet are completed at the time of purchase. It is done at the checkout in a store or after the shopping cart is completed on an e-commerce site.

It can also occur upon delivery or upon receipt of the invoice, especially for high-value items. In some cases, the customer pays after receiving the invoice.

Special cases

Paying cash is typically linked to an immediate and final transaction that can’t be disputed. However, several specific situations are usually regarded as examples of cash payment.

Instant transfers feel like cash payments, while standard transfers might have a short delay before the money reaches the recipient’s account. Generally, these delays are brief and don’t significantly impact the transaction process.

Using a debit or pre-paid bank card is also often similar to paying with cash because the money is instantly withdrawn from the account. That said, there are some subtleties to this approach. Real-time authorisation causes a slight delay compared to a cash payment, and the ability to dispute a transaction provides additional security for the customer. These factors make debit card payments different from cash payments in the strictest sense.

Still, in today’s practice, businesses, customers, and French banks all view debit card transactions as cash payments, which greatly simplifies dealings.

What are the advantages of cash payment?

Paying cash offers many benefits for businesses, especially in managing cash flow and reducing risks.

• Less risk: Paying in cash eliminates the risk of non-payment or late payment. For example, a craftsperson who charges customers in cash can rely on a steady and consistent cash flow, allowing for better financial management and investment in the business.
  
• Less follow-up: Businesses don’t need to manage accounts receivable or track payment terms. This reduces administrative costs and improves operational efficiency.
  
• More offers available: Businesses that accept cash payments can easily provide discounts or special offers, speeding up collections and strengthening customer relationships.
  
• More satisfaction: Customer satisfaction keeps many businesses competitive. Paying in cash can increase their sense of a successful transaction, resulting in higher satisfaction.
  

What are the disadvantages of cash payment?

In general, paying in cash has few disadvantages for businesses. Even so, it’s not always the best way to pay, especially for large purchases. In some situations, businesses can benefit from offering various payment options.

Barrier to major purchases

Paying cash means handing over a large amount of money for big purchases, which can cause cash flow problems for some customers. This is often the case when buying appliances, high-tech products, or travel services. Buyers need to plan before making a cash purchase.

If cash is the only option, it can discourage purchases and result in a significant revenue loss. Businesses need to adapt to customer preferences and offer payment options that complement cash.

Competitive disadvantage

In a competitive market, accepting cash payments exclusively might reduce the number of potential customers. Some prefer or need financing solutions such as credit.

If these options are not offered, the company risks losing sales to competitors with more flexible payment terms. Credit as a payment method could become a competitive advantage for other businesses.

Constraint on recurring purchases

In industries dominated by B2B relationships, such as wholesale distribution, paying in cash can be a significant constraint. Most businesses need payment delays to move their inventory and generate the money required to pay their invoices. Forcing companies to always pay in cash can drive them away and limit the growth of your B2B business.

Businesses can improve their customer relationships and foster loyalty by offering appropriate financing options.

Businesses and cash payment

Paying in cash can work well for some businesses, but not all. Your choice of payment methods need to be tailored to your business’s industry. Including cash among several payment options is often a wise choice.

Offering a wide range of options can satisfy customers who want to pay immediately while providing flexibility for those who prefer different methods.

It all depends on your business and your needs. With Stripe Payments, anything is possible. Provide your customers with an easy and secure shopping experience that meets their expectations. Stripe Payments offers more than 100 payment methods to simplify your transactions.

Of all the options, cash payment strikes a balance between simplicity, efficiency, and customer satisfaction.