How Cash Handling Costs Impact Local Businesses

Why do so many local businesses feel like they’re losing money before the day has even started? Cash handling is a quiet drain — the sort of cost that doesn’t scream, but slowly eats into margins. And for small operators juggling staff, rent, and rising utilities, those few minutes spent counting notes or chasing change can quietly add up.

Here’s the short version: cash handling increases labour costs, slows down customer flow, raises shrinkage risk, and limits business growth. And yes — it hits certain industries harder than others, especially those that rely on fast, repeat transactions like cafés, laundromats, bottle-os, and service retailers.

How does cash handling actually cost local businesses money?

Anyone who’s run a small shop knows the routine. Staff start their day by floating tills, counting change, hoping no one’s taken the last $20 notes. Then there’s the end-of-day reconciliation, which somehow never matches up perfectly. These small friction points create hidden expenses through:

• Paid staff hours spent sorting cash

• Bank deposit fees

• Time spent chasing coins (the forgotten “micro tax” on small business owners)

• Errors from manual counting

• The occasional awkward moment when you run out of change

From a behavioural perspective, this is a classic example of loss aversion — we feel the sting of errors or shortages more than the benefit of smooth operations. Yet many business owners stick with cash out of habit or perceived convenience.

Why does relying on cash feel riskier now?

Cash once felt simple. These days, it feels like juggling. You’ve got:

• Higher insurance costs

• Greater risk of theft

• Longer reconciliation times

• Staff needing training on cash-handling processes

And then there’s the shift in customer behaviour. In Australia, tap-and-go has become the norm; cash payments have dropped sharply over the past decade. The Reserve Bank of Australia has repeatedly noted the long-term decline in cash use, accelerated by the pandemic — helpful context for operators feeling the shift (RBA Cash Use Data).

If your business relies heavily on quick turnover — think a busy café during the morning rush — cash slows everything down. The friction becomes noticeable. Customers expect speed. Tap, beep, done.

Where do cash handling costs hit hardest for small operators?

Some industries feel the pinch more than others. A great example is the eftpos laundromat model. These operators thrive on self-service efficiency. Every minute a machine isn’t running is revenue lost. Cash jams, broken coin mechanisms, or change shortages stop the flow instantly.

But laundromats aren’t alone. Small businesses across Australia report similar issues:

• Pet groomers dealing with after-hours cash drop-offs

• Food trucks trying to reconcile during a windy night with notes flying around

• Local grocers counting tills twice because something “felt off”

In behavioural science terms, businesses operating under time pressure pay a “cognitive load tax”. Cash simply adds more to the mental juggling act.

What hidden behaviours make cash handling more expensive?

Here’s where behavioural economics gets interesting: people consistently underestimate small, repetitive costs. It’s called the planning fallacy — we assume processes will take less time or be less messy than they really are.

Cash is a perfect example.

Business owners often say, “It only takes a few minutes to do the till.” But multiply that by:

• Every staff member

• Every shift

• Every day

• Every mistake

Suddenly, cash is eating a measurable chunk of profit.

Another factor is “default bias”. Many operators keep using cash because it’s what they’ve always done. Changing systems feels like hassle — even if the financial benefit is obvious.

Are digital payments actually cheaper for local businesses?

In many cases, yes — especially when you factor in the hidden labour costs of manual cash handling.

Digital systems reduce:

• Counting errors

• Banking trips

• Staff time

• Machine downtime (in laundromats or automated service settings)

• Theft and shrinkage

They also boost customer speed and deliver cleaner reporting. Anyone who’s tried reconciling cash after a chaotic Saturday knows the value of a clean digital trail.

And beyond the pure dollars-and-cents comparison, there's something more subtle: consistency. As Cialdini notes, people trust systems that behave the same way every time. Digital payments offer that predictability — cash rarely does.

How can business owners tell when cash is costing them too much?

A simple gut test helps:If handling cash feels like it takes more time than the money it brings in, it’s probably costing you more than you think.

More practically, look for these signs:

• Staff complain about banking runs

• Cash shortages happen regularly

• Slow customer flow during busy periods

• Machines or processes get stuck due to cash faults

• Your revenue reporting never seems to match your intuition

If two or more of these ring true, the business is likely absorbing unnecessary operational drag.

FAQ

Do customers still expect cash options?

Some do — especially older demographics — but the majority now prefer tap-and-go for speed and hygiene. Offering digital doesn’t mean ditching cash entirely; it just reduces reliance on it.

How much does cash handling typically cost?

Between labour, banking fees, shrinkage, and downtime, many small businesses run costs anywhere from 3%–7% of revenue tied directly or indirectly to cash processes.

Are digital systems secure?

Generally yes. Most modern platforms use encryption, device-level security, and fraud monitoring. No system is perfect, but digital tools usually reduce risk compared to physical cash.

Cash once felt like the lifeblood of small business. Today it’s closer to a sandbag — manageable, but heavy enough that you feel each unnecessary step. As local operators shift to faster, cleaner payment systems, the businesses that benefit most are the ones where time truly is money. And for anyone running a modern setup — whether a café, a mobile service, or even a fully automated eftpos laundromat — the shift away from cash isn’t just convenient. It’s liberating.

Some business owners I’ve spoken to describe the moment they stopped relying on coins as “like gaining an hour back each day”. Funny how small frictions disappear all at once.

If you’ve ever wondered how much smoother operations could be, the answer often starts with rethinking how money moves around your business — and how much labour you’re quietly spending to chase it. You can see an example of how operators approach this shift through platforms like BubblePay.