Even though paying for salon services is much more convenient when using a card or a digital wallet, a lot of customers still prefer to pay with cash. However, you should still be careful about accepting cash payments at your place of business. Keep in mind that you must report all income to the government, including cash. Plus, you need to know how much money you have on hand to keep operations running smoothly.
Tips for accepting cash payments from salon customers
Do you handle a lot of cash at your salon? If so, try the following five tips for handling cash effectively.
1. Communicate your payment policy to customers
Customer experience at your salon increases when you’re transparent about payment policies. Whether you choose to not accept cash payments, only accept cash, or have a variety of payment options, make sure you let your customers know before performing services. Doing this will allow your clients to prepare to pay you ahead of time.
If you have special payment methods at your salon, make sure you post them at your front desk, your salon website and your social media pages. If your clients reach out to you with any questions regarding your payment policy, be sure to answer these questions before their appointment to ensure they understand your preferred methods of payment before they arrive. For example, if a customer must spend a minimum amount to use a credit card and a client requests a service under the amount, let them know up front.
2. Record every cash transaction, no matter how small
Think small transactions are not worth the hassle of recording? Think again. Low-value sales add up and can cause big problems in your books if left unrecorded.
The IRS requires you to track all business transactions and report them on your tax return. If you don’t record small transactions, it’s likely your accounting records and taxes will be incorrect.
Create a line in your general ledger for each cash sale. Note what the transaction is for, its value, and the date. To simplify bookkeeping processes, use accounting software. With an accounting solution, you enter transactions, and the software creates balances for you.
3. Save receipts and bank statements
For accurate finances, you can’t only rely on your books. You need supporting documents that match your records, especially when handling cash. Keep business receipts and statements related to your salon’s transactions.
Create a system for managing financial documents. You could organize them into files or you might also scan them and store them on your computer or in the cloud. Whatever method you choose, be consistent to avoid losing documents.
4. Manage a petty cash fund
Sometimes, you need to make small purchases for your salon throughout the day. Using a business credit card or bank card might not always be the best option. Frequently using cards can cause you to incur too much credit card debt or overdraft an account.
An easier payment method might be to use a petty cash fund. Petty cash is money set aside to pay for small business purchases. For example, if you run out of a certain product, you might send an employee to buy more with petty cash.
To keep your records organized, separate petty cash from the cash payments your salon receives - and be sure to track petty cash transactions apart from other business transactions. Even though it might seem fine to mix the cash payments and petty cash funds, you need to keep them separate for accurate records.
5. Keep cash in the bank, not the cash drawer
By accepting cash payments, you have instant access to business money. You don’t have to wait for a credit card to process or check to clear. This is convenient, but it can also be dangerous since cash can easily be stolen, lost, or damaged.
To keep cash safe, deposit money into a business bank account. Only use the account for salon transactions. Don’t withdraw cash for personal spending.
It’s important to balance your cash drawer each day. Start the day with a base amount so that you can make change ($100-150 is usually enough for a small-sized salon). Determine the end-of-the-day balance by counting all the cash in the drawer and subtracting the base amount. Then, deposit the cash revenue to your bank account at the end the day.
Accepting cash payments at a salon
Typically, salons accept cash payments for services. As a salon owner, you need to know how to manage the cash payments you receive. Using the simple strategies described above will help you handle cash at your business efficiently and legally.
About the AuthorMore Content by Amanda Cameron