So what does it mean for your organisation? While many businesses are quick to react by enabling cashless payments for their customers, little thought is given to their employees and finance teams.
Organisations are still using petty cash for employee reimbursements, which does not fit the world that we live in today. How will a cashless environment affect these businesses and their employees?
In a study done by Square, one in three Aussie businesses turned cashless between January and June 2020. The COVID-19 pandemic has made more businesses turn towards credit and debit card payments.
Businesses in the ACT topped the statistics, with cash payments dropping from 42 per cent in January 2020 to only 14 per cent in April 2020. It was followed by Tasmania, South Australia, and Victoria, where cash sales plummeted to more than half during the same period.
This isn’t the only data that points towards an increasingly cashless society in Australia, studies by the RBA show that ATM withdrawals dropped by over 6 per cent within two consecutive years. During the peak of the pandemic, withdrawals dropped to as low as $6.2 billion in April 2020.
Australia is currently 7th in the world for cashless readiness, and it shows. For example, major Aussie supermarket Woolworths has said that 90 per cent of its transactions were made virtually, and this trend shows no signs of stopping.
COVID-19 may have been a significant catalyst for businesses going cashless, but the truth is these trends were gaining momentum even before the pandemic. So why are companies jumping on the bandwagon?
Cashless payments give much more accountability because there’s always a digital trail of where the money is spent. Besides that, tangible cash can be stolen which makes it risky for businesses, while cards can always be deactivated.
There’s no denying that fraud and scams do happen. However, studies show that total losses from fraudulent transactions on debit, credit and charge cards fell by 15 per cent in 2019, which means that society and businesses are becoming more prepared for these scenarios.
We’re becoming increasingly cashless every day. Retailers are encouraging tap-and-go payments for hygiene reasons, consumers are going out less because of lockdowns, and there’s also reduced operating hours for brick-and-mortar stores as a result of the pandemic.
More importantly, more employees are working from home, which means that having a card is a necessity that makes doing their job so much easier. So which cashless payment methods were popular? Debit cards ranked highly even before the pandemic, accounting for 44 per cent of transactions in October and November 2019.
Most businesses are unaware that cash can be costly. This is because most of the costs hit them indirectly. Here are some examples of these hidden costs:
Organisations that have gone cashless with automation found themselves better equipped for a cash-free society, and more prepared for an inevitable future.
There are several reasons for the hesitancy to automate. Firstly, most businesses automatically associate cards with corporate credit cards. While convenient, corporate credit cards come with high card costs and even require a personal guarantee from the business owner.
Or sometimes, most businesses are simply unaware that there’s a better solution out there than petty cash or credit cards, such as prepaid corporate cards.
Businesses owners who want the convenience of cards without the hassle of high fees and interest rates can opt for a preloaded card like Budgetly instead. Most preloaded cards come with an expense management solution that allows businesses to view and control employee spending, while making it easy for employees to spend when needed.
Plus, these expense management solutions can also automatically reconcile transactions. Meaning finance personnel don't need to waste time manually checking through receipts and claims.
Cash is still important and it’s still prominent in many transactions today. But there’s no denying a growing need for cashless set-ups, so why not be prepared for both cash and cashless scenarios? That way, companies can empower their employees by giving them a choice on which works better for them.
Budgetly’s preloaded card and expense management software help Aussie companies go cashless and cut manual time by up to 30 hours a week through automation. To learn more about us, download our eBook, Managing Expenses with Budgetly. Alternatively, schedule a demo today for a personalised chat with our team.