In Australia, those which are against cash try to dictate to those that are pro cash, that they must give it up. On the other hand, those that are pro cash, simply say they don’t care if you want to go cashless, just don’t dictate to us that we must give up cash.
Climate change activists are one of the greatest supporters of cash as they keep saying due to climate changes, storms, floods and fires will occur with increasing frequency. As these disasters appear to be happening with increasing frequency, when they occur, we know our digital devices will not work.
We also know that countries which tried to go digital, also found it didn’t work as intended. Sweden has just shown recently, they are now realising that cash is an essential part of life. Other countries such as the US have legislated that cash much be accepted as a payment medium, and Australia is considering the same type of legislation.
In regards to the negative aspects of the cashless society, I have illustrated many of these factors in previous newsletters and blogs which can be found at www.creditmatters.com.au.
The following information therefore focuses on the positive realities of cash in pocket and in business.
The four greatest attributes of cash in pocket or bank accounts are:
- cash is a contingency fund for emergencies and positive buying opportunities,
- it is proof of a disciplined approach to savings, which then implies, you will take a disciplined approach to paying your loans,
- it provides a budgeting methodology for paying bills and savings,
- it provides emotional and financial well-being, and finally
- it is just commonsense to have cash reserves.
1 Cash as a contingency fund in business, which means when damaging and unexpected events occur, your business can hopefully cover these costs. Alternatively, when unexpected opportunities become available, you can gain a tax-free benefit at the expense of your competition. If you want evidence of the importance of cash in bank, there is none better than the number of businesses which closed over and since COVID because they couldn’t pay their debts.
Allowing cash payments, in addition to digital payments, means your business will not be subjected to adverse publicity and a loss of sales because it doesn’t accept cash.
Cash as a contingency for an individual, occurs when there is a denial of service, a major flood, fire or in an area that does not provide digital coverage to enable digital payments. It is also a great back-up in day-to-day essential purchases when digital payment account has no free funds or is on stop.
Equally of value is when regional businesses offer discounts for cash payments.
2 Cash savings for individuals provides historical evidence of an ability to manage money, and an ability to pay a deposit for a home. These factors are particularly important when individuals are seeking a housing loan.
3 As the economic conditions worsen, or when people, young and old which have limited income sources, often find difficulty in managing money properly. As a result, they now budget via cash in envelopes, jars or any other means that works for them as this is the best method of paying their bills as they become due, or saving to meet their objectives.
4 Cash in pockets or bank accounts, provides both businesses and individuals a positive level of emotional and financial well-being. When there is cash in a pocket or in bank accounts, you can exhibit a whole different level of well-being and confidence than those who don’t have such resources. There are enough stresses in business and life without wondering how you are going to pay for an essential service or a product, or the next bill when it becomes due, or there is a denial service when you need to feed the kids, etc.
Another prime example for a business selling on credit, is the customer with no trading history, or is of a doubtful character, or is known as a slow payer. These situations suggest those making applications do not qualify for a credit facility. Increasingly in the future, there will many offers from customer who will be requesting credit who are not suitable for a credit facility at the first application. If credit is then granted inappropriately, these situations will often lead to yet another bad debt.
The credit provider can however, suggest perhaps a great sales discount for cash up front payment is a possible way forward. This strategy will soon lead to either a profitable sale, or show the credit provider that the customer is unable or unwilling to pay cash.
5 At the end of the day, it just commonsense to have some cash available to cover unexpected bills or positive buying opportunities, or when digital payment methods are not working. Unfortunately, commonsense appears to be an increasing less visible factor in today’s world.
In summary
When we talk about the use of cash in pocket and in the bank, there are two distinct camps, almost with a 50/50 split. One camp says cash is valueless and/or it is no longer necessary. The other camp says that cash is a lifeline to survival, for positive buying opportunities and must be maintained.
Interestingly, those that are pro cash, simply say they don’t care if you are a cashless advocate, just don’t dictate to us that we must give up cash.
Indirectly, even if they don’t mean to, climate change activists are the greatest supporters of cash as they keep saying floods, storms and fires will occur with increasing frequency. When disasters occur, as many people have found out, digital devices don’t work.
The negatives of cash have been discussed many times previously. This blog has focused on the positives of why cash in pocket and bank accounts is a necessary survival and growth factor.
At the end of the day, having some cash is just commonsense, an attribute which seems to be missing in so many of the cashless advocates these days.
Want to know more, contact Kim at kim@creditmatters.com.au, or 0411 649 261, or have a look at what we offer via our website at www.creditmatters.com.au
