Question

In: Finance

Suppose you own a small business. Why might it be more beneficial to accept: debit or...

Suppose you own a small business. Why might it be more beneficial to accept: debit or cash versus a credit or check payment?

Solutions

Expert Solution

Though many customers would prefer to pay by debit / credit cards, or by check, the benefits of accepting payments by cash only can be beneficial to a small business in the following ways:

1. For a small start-up, accepting payments in cash is a huge advantage, as it can pay for unexpected expenses immediately.

2. According to the U.S. Small Business Administration, fraud risk is much more common among businesses that accept debit, credit cards or electronic payments.

3. To run a business accepting only cash payments requires very small investment in currency counters and cash drawers.

4. Accepting cash payments allows a small business to keep track of its profits on a daily basis, as all transactions are immediately accounted for. They do not have to wait for clearances from credit card companies.

5. Lower transaction cost is another important advantage of accepting cash payments. Retailers have to pay a fee to the credit card company for each transaction involving credit card.

The cash-only business should however ensure that there is an efficient cash management system in place.


Related Solutions

answer in 175 words or more. Suppose you own a small consulting business with a small...
answer in 175 words or more. Suppose you own a small consulting business with a small office and 5 employees. Identify the types of adjustments you would need to make at the year’s end and the accounts affected. For each adjustment, indicate how it will impact your financial statements (income statement and balance sheet).
Which accounting method is more beneficial to a small auto mechanic business, the payback method or...
Which accounting method is more beneficial to a small auto mechanic business, the payback method or the accounting method?
Suppose you own a small business. You are facing a significant amount of loss. What are...
Suppose you own a small business. You are facing a significant amount of loss. What are the best ways of increasing your revenue and reducing your cost in the short run. Assume you are in highly competitive market.
Should you video conference or travel to a business meeting? Suppose you own a profitable small...
Should you video conference or travel to a business meeting? Suppose you own a profitable small business in Washington, D.C. You desire to hold an essential 1-hour meeting with business executives in New York, NY. You have two options: You can fly to New York. You own 25,000 frequent-flyer miles, which you can return to the airline at any time for a free ticket anywhere in the United States. Thus, you need not pay for your flight to New York....
Propose measurement techniques that might be beneficial for a business  to use as an aid to business...
Propose measurement techniques that might be beneficial for a business  to use as an aid to business performance. Use examples to support your answer. (800 words )
If you could start your own small business franchise, what would it be and why? What...
If you could start your own small business franchise, what would it be and why? What are two specific disadvantages you would anticipate encountering as the owner of that small busness or franchise? What is the one thing you think would the most important thing to do in making sure your business was successful and how would you try to achieve it? Be as specific as possible in your response.
1.The more commonalities that can be formed between business units, the more beneficial it is for...
1.The more commonalities that can be formed between business units, the more beneficial it is for related diversification because: a.there is less work to be done when entering the new industries. b. there is less potential to realize profit-enhancing benefits. c. there is more potential to realize profit-enhancing benefits. d. it creates an efficient internal capital market. 2. To fund diversification initiatives, managers of companies use: a. free cash flow. b. funds from other business units. c. investment loans from...
Assume that you are going to start a small business of your own. Describe the business...
Assume that you are going to start a small business of your own. Describe the business and discuss the following: What costs you would incur; What competition you might experience; How you would determine the price you would sell your product; and, How much product you would produce?
Why is a company structure beneficial for a involved in business export?
Why is a company structure beneficial for a involved in business export?
If you were to start your own business (please state what business), how might you use...
If you were to start your own business (please state what business), how might you use Net Present Value to help you make a decision if this project is worthwhile. What numbers/inputs would you require to determine the NPV? TO RESPOND TO THIS QUESTION IF MY CHOICE OF THE BUSINESS IS REAL ESTATE. HOW CAN I RESPOND TO THESE QUESTION?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT