New PayPal Study Shows Cash-Only Businesses Are Losing Out On Huge Sums Of Money

Small and medium-sized enterprises (SMEs) in the UK are missing out on £800 million worth of sales each year because they do not accept card payments.

Research undertaken by PayPal showed that one in ten British firms lost more than £1,800 in the past year because they only deal in cash.

Only 36 per cent of firms in the UK currently offer card payment options. Around 13 per cent of SMEs said they could not afford to run chip and PIN machines on a monthly basis, while ten per cent were put off by the initial start-up costs.

This is leaving many businesses out of pocket, though, as more and more people are shunning cash in favour of credit and debit cards.

The study - which gauged the views of 1,000 consumers - indicated that as many as 46 per cent of people have opted not to buy a product or service because they did not have enough money in their purse or wallet at the time.

PayPal has introduced new, affordable card payment terminals aimed at small businesses in recent months, but it seems many SMEs are reluctant to change their ways.

Narik Patel, director of mobile merchant services at PayPal, said: "Nowadays few consumers are carrying a cheque book with them, or even cash. This means businesses need to offer consumers alternatives, otherwise they risk missing a sale."

This is not the first report to highlight deficiencies in the way some UK-based SMEs operate.

Last month, research published by finance software provider Exact showed that almost a quarter of British SMEs have lost out financially because they have failed to issue a customer with an invoice.

In many cases, the sums involved were minimal, but there were some instances of businesses missing out on huge payments because of mismanagement.

Around 12 per cent of survey respondents admitted to letting a bill of £10,000 or more go unpaid.

Collectively, failure to chase payments costs SMEs £3.7 billion.

Expert Opinion

SMEs have a vital role to play in helping rebuild the economy after a difficult few years, but a key part of that is ensuring they look after themselves in the process. This PayPal research rightly highlights how businesses need to ensure they evolve with the times to ensure they are well-placed to take advantage of any possibilities which come their way. <br/> <br/>"Being able and prepared to take payment is understandably a key aspect of this and it is worrying to see studies raise concerns over the impact that potential mismanagement of finances may be having on growing businesses. <br/> <br/>"We would urge businesses to ensure their financial processes and systems are in order to ensure they are not only maximising their potential but also meeting relevant compliance issues. It is vital as well for any businesses with concerns in this area to ensure they seek specialist advice on such issues at the soonest possible moment." Fergal Dowling - Partner