3 Proven Strategies to Boost Efficiency in Your Cash-Based Business
3 Proven Strategies to Boost Efficiency in Your Cash-Based Business
March 30, 2023
In a world where business practices are more fast-paced than ever and the struggle to keep up with competitors is all too real, efficiency has never been more important. Fortunately, you can begin implementing various efficient practices into your business TODAY, and experience a more efficient, well-organized, and ultimately, more successful business altogether.
Today, we're providing you with a powerful checklist that cash-based businesses can turn to to help organize their business and boost their overall efficiency. Along with this checklist, we'll cover some common problems with cash business payroll that can slow you down and cost you money.
What is a Cash-Based Business?
Before we talk about streamlining the operations of a cash-based business, let's get into exactly what this type of business entails in the first place.
Unlike other businesses operating within the standard "accounts receivable/payable" system, a cash-based business often accepts payments in physical cash.
Certain advantages come with this business style, including mitigating the risk of checks bouncing, receiving payments immediately, and not being subject to costly payment processing fees from credit card companies.
Like anything else, however, there are also certain drawbacks to cash-based businesses. Luckily, most of these challenges can be overcome with certain practices in place (which we'll cover later in this post).
Problems with Cash Business Payroll
As for exactly what the drawbacks as mentioned earlier can entail, here are two examples.
While any business is susceptible to payroll challenges, cash-based businesses can face unique challenges if they don’t have a system in place to establish traceability for cash payments.
Without a way to precisely track who earned what and when employees are paid in cash without a documentation system in place, there are bound to be discrepancies between what was recorded and what was actually paid out.
This forces business owners to "guesstimate" how much they should pay out each month — leading to potential overspending or under-budgeting months at a time.
Fortunately, with a payroll solution like PayStubs, they can generate documentation of every single payment, overcoming the lack of traceability that can otherwise come with cash transactions.
Inability to keep up with standard payroll practices
As cash businesses are limited in terms of payment methods, they may also find it difficult to ensure their employees are paid on time and according to industry standards. Some may also have difficulty providing their employees with the benefits of a regular employee who receives e-transfers or other electronic payments.
Again, this is where software like PayStubs proves to be an especially powerful tool. You can quickly and easily upload your payment data to keep track of your employee/contractor payment and get accurate tax calculations.
Other challenges Along with unique payroll challenges, cash-based businesses can also experience challenges with vendor payments and cash flow management.
In terms of vendor payments, companies operating with cash can quickly lose track of their financials by paying vendors with bills. This leaves the possibility of some payments and fees going undocumented on official records.
If a vendor flags you for non-payment or similar issues, it’ll be hard to contest them without a documented papertrail.
Some cash-based businesses have difficulty properly managing their cash flow, too. Without a clear system in place, it’s a challenge to keep track of payments and the amount of money coming into – and going out of – their business.
Now, let’s turn back to some specific strategies for overcoming the payroll challenges your cash-based business might be facing.
3 Easy Steps to Organize Your Cash Business
Many of the challenges your cash-based business might be facing can be overcome with effective organizational practices in place (and the best payroll software available!). But you need to know what those practices are to use them.
That's why we're going to share three easy steps for organizing your cash business and helping you overcome the challenges you're facing, broken down into three categories: receiving and logging cash, managing cash, and paying employees.
1. Organizational tips for receiving and logging cash
First things first! You want to create a system for tracking each and every payment received. Some do this manually while others turn to the help of software. Both can be equally effective, but it depends on the time and resources available to you (as well as your unique business).
Here are some key components of creating an effective system for receiving and logging cash:
Create a log: You'll need an organized ledger containing all the transaction information. This should include the date and time of payment along with any additional notes relevant to the transaction.
Record all payments: Every time you receive a payment in physical form, it should be recorded right away. Never let these records gather dust!
Use technology: Even if you don't rely on Fintech to collect payments, you can still take advantage of its power in other ways for your cash-based business. Turn to software programs to keep track of all incoming payments. These software solutions make it easier to categorize payments and generate reports showing payment trends and patterns.
2. Organizational tips for managing cash
The second step to organizing your cash-based business is managing all that incoming cash flow in the most efficient way possible. This includes tracking the amounts received and setting up procedures for the safe storage and security of the funds.
Start by implementing these strategies:
Establish a system that regularly reconciles your cash flow accounts. That way, you'll know all payments are logged correctly and accounted for properly.
Perform frequent audits to guarantee accuracy and maintain full adherence to any laws or regulations pertaining to your company's operations. You might also consider hiring a third party to do this.
Establish a cash handling policy: With a policy outlining the steps to be taken when accepting, counting, and storing cash payments, your business is one step ahead of the competition. Remember to include instructions for properly disposing of invalid or counterfeit bills in these guidelines.
Secure storage solutions: Make sure secure storage solutions are in place for all incoming payments – such as safe deposit boxes or lockable drawers. This will keep your funds safe from theft and minimize the risk associated with dealing in physical currency. And yes—this means no more storing it in a shoebox under your desk!
3. Organizational tips for paying employees
Cash-based businesses need a reliable way to pay their employees in compliance with industry standards that also gets them paid on time.
Here are some steps you can take to get this more efficient process up and running:
Develop a payroll policy clearly outlining the expectations, including when employees will be paid, along with any applicable laws or regulations related to payment processing.
Regularly audit employee timesheets for accuracy and compliance.
Make sure paychecks are delivered on time and processed according to law.
Boost Efficiency in Your Cash-Based Business with This Checklist
Ready for your handy checklist to help you skyrocket your cash-based business' success? The wait is over...here it is!
Develop a filing system to track and record all cash transactions and receipts
Rely on PayStubs to simplify your payroll (more on that in a moment)
Use a document or a reporting app to streamline cash flow and track money in and out
Don't miss out on a single penny—account for every cent that goes into or out of your business
Prioritize inventory cost control—this can help you cut costs at the same time!
How PayStubs Can Help
Whether you run a hair salon, a cafe, a car wash, or any other primarily cash-based business—you need to know you're paying your employees on time and in compliance with applicable laws. PayStubs can help with that!
Prepare to say goodbye to manual payroll processing with our cost-effective payroll solution that: