Have you ever wondered if a cashless business is for you? In this article, learn why many home remodelers are transitioning away from cash and checks. Read about the advantages of cashless transactions and get tips you can use today to transform your own remodeling company.
The Importance of Modernizing Payment Methods for Home Remodelers
Cashless transactions are a growing trend in the business world today. You’ve probably conducted dozens or even hundreds of them in your personal life.
Here are some statistics that may interest you about cashless transactions:
- As of 2024, cashless payments are estimated to make up more than 87% of all payments.
- The above number is expected to rise to over 92% in the US by 2026.
- High-income households are those most likely to afford home remodeling expenses. They use cashless payments for nearly all transactions.
Obstacles in Accepting Cash and Checks
Not only are cashless transactions becoming the norm. There are several negatives associated with accepting cash and checks for home remodelers. These include:
- Risk of carrying cash
- Possibility of employee theft
- Hassle of frequent bank deposits
- Greater potential for accounting errors
- Customer inconvenience and dissatisfaction
- Inability to grow business
- Increased likelihood of late payments
- More accounting headaches
In the next section, you can learn how the advantages of a cashless remodeling business overcome these challenges.
What Are the Cashless Business Advantages?
A cashless business is technically one where no cash or checks are accepted as payment for services. Instead, the business uses other types of cashless digital or mobile payment methods, such as:
- Credit cards
- Debit cards
- Website portal
- Mobile wallets
- P2P payments
Mobile wallets include services like Apple Pay and Google Pay. Peer-to-peer (P2P) payments include third-party apps like PayPal, Venmo, CashApp, and Zelle.
Practically speaking, a cashless business may also be one where cashless transactions are the primary type of payment. However, the business may also accept cash or checks from customers who have no other options. This is the law in some cities and states (see below).
Advantages of Going Cashless
There are many pluses to getting rid of cash payments. First, there’s the risk of carrying cash. If you are paid in cash, it’s your responsibility if you lose the money. There’s the danger of having the money stolen, by unscrupulous employees for example.
Going to the bank every day to make deposits is a hassle. It’s one more thing remodelers don’t need on a long daily to-do list. But if you don’t deposit payments daily, you can become a target for thieves who know you keep a lot of cash around. Cashless payments make theft a nonstarter.
Switching to cashless payments makes streamlining your accounting much easier too. The systems that manage cashless payments make it simple to generate reports on earnings and other data. You would have to do these by hand with cash payments.
Customers, for the most part, like cashless payments. They’re used to paying like that at the grocery store and entertainment venues. It’s convenient, letting you both quickly complete the transaction at the end of a job. So, you may find you add to your customer base by going cashless and picking up clients who appreciate the ease.
Additionally, cashless payments offer more security. Most customers don’t want to keep large amounts of cash on hand to pay their contractor. And giving a check these days can leave a client open to financial or identity theft. Cashless payment methods have features in place, however, to protect personal data and guard against misuse.
Finally, foregoing cash and checks can help you get paid faster. Isn’t that always desirable? No more sending an invoice or waiting for a check to clear your bank account. With cashless payment methods, you’re usually paid immediately—within 24 hours at the latest.
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How Can Home Remodelers Transition to a Cashless Business?
Are you thinking about changing your remodeling business to a cashless model? If so, you want to approach it methodically. Here are the steps you should take to integrate cashless payments into your current business operations.
Step 1: Examine the Unique Needs of Your Business
Every remodeling company is different. You might be a one-person operation or perhaps a small business with a couple of employees. Or you could be an enterprise-level company with multiple locations.
The types of jobs you do are important to consider too. Do you do a lot of small projects that take a few hours or maybe one day at most? Or do you perform larger remodels that go on for weeks or months?
What kinds of numbers are you billing? Are most of your jobs invoiced at under $1,000, or are you charging five or six figures for your services?
How do you bill your clients for these jobs? For little jobs, you probably take payment at the end. But for big jobs, you might request a deposit or split payments up to cover expensive supplies.
If you perform a lot of small-ish jobs, you would probably lean towards mobile payment services that accept debit and credit cards. However, if you’re billing, say, $50,000 for an addition, your customers likely can’t use cards for such a large amount. You’ll want the ability for clients to pay via bank account, such as through a portal on your website.
Step 2: Explore Different Payment Platforms
Once you figure out your typical billing model, you can look at various payment methods to see which ones are best for your needs. You’ll probably want a couple of different options to satisfy your customers.
For instance, imagine you want to use P2P payment methods. Not everyone has a PayPal account; they may prefer Venmo instead. And while most banks work with Zelle, there are still some that do not. So having alternatives is important to maintaining the broadest customer base possible.
Then there are the different features associated with each platform. Some of the top functions and perks you may be interested in include:
- Contactless payment
- Security features
- Multi-channel support
- Free card terminals
- Tracking and reporting
- Digital wallet storage
- Deposit within 24 hours
For most business owners, growth is always a goal. So be sure you choose a platform that can scale with you. Otherwise, you could find yourself in a “switching horses midstream” type of situation if you have to change platforms suddenly. That could slow you down significantly.
Understand what type of commitment is required to use a platform. Do you need to sign a contract? Are there any fees involved for you or customers, or are transactions free?
The Zelle P2P platform, for example, is free for both parties to use. PayPal, on the other hand, charges fees for different actions. They may take a percentage for money sent to a business versus “friends and family.” And it will charge you a fee to instantly transfer a customer’s payment to your account, as opposed to waiting several days for a standard transfer.
You may want to choose a payment platform specifically designed for contractors and remodelers. This will help with business operations integration, as discussed in the next section. Most of these are incorporated into a service provider’s website.
Step 3: Make Sure Your Preferred Platform Will Integrate Well with Your Current Systems
There’s one other feature that you must look for with any payment platform: easy integration with your current systems. Ideally, your payment system should mesh seamlessly with related software you use for tasks like:
- Customer relationship management (CRM)
- Generating estimates and quotes
- Creating invoices and bills
- Accounting reporting and taxes
- Business forecasting for growth
You don’t want to have these functions in separate silos. Instead, it’s better to have them work together, like the parts in a car engine. Otherwise, you’re undoing all the convenience you gain by going cashless.
Step 4: Double-Check State and Local Laws for Cashless Businesses
The Federal Deposit Insurance Corporation (FDIC) conducted a study about household banking in 2021. The results showed that over 4% of households had no bank account associated with anyone in the home.
Furthermore, being “underbanked,” as this is known, was more common among Black and Hispanic households. For this reason, multiple states and municipalities have enacted bans on pure cashless businesses. They felt it was discriminatory to not offer cash payment options to underbanked individuals.
While businesses in these areas may accept multiple forms of digital or mobile payments, they must also accept cash.
As of 2024, states with cashless business bans include:
- Colorado
- Connecticut
- Delaware
- Massachusetts
- Montana
- New Jersey
- Oregon
- Rhode Island
- Tennessee
Also, the cities of Philadelphia, New York City, Washington DC, and San Francisco have banned cashless businesses.
Arizona, North Carolina, South Carolina, Missouri, and Ohio have been considering similar legislation.
Therefore, it’s imperative that you understand the laws for cashless payments where you operate. You should also stay current with legal requirements, as your area could change. Your business will be required to accept cash, although you can certainly encourage cashless payments.
Step 5: Anticipate Client Questions and Concerns
Naturally, your customers may have some questions about how cashless payments work and what any payment changes mean for them.
Before you launch a new cashless payment model (see below), it’s wise to think about these concerns in advance. That way you can address them prior to rolling out your payment system.
Step 6: Roll Out the New Cashless Model to Your Clients
So now you’ve chosen cashless payment methods and have everything set up. It’s time to introduce the system to your customers.
You don’t want to spring a new payment model on your clients with no advance warning. This could be embarrassing for them, causing you to lose customers.
It’s best to share the information as much as possible via:
- Your website
- Email or newsletter
- Text messages
- Online directories
Also, whenever a customer schedules a new job, inform them about how they may pay. That way, they won’t be caught off guard after a job and you’ll get paid in a timely fashion.
Step 7: Train Employees on How to Use Your New Payment System
If you have staff, they need to be trained on how to operate the platform. Be sure they understand things like which credit cards you accept and how receipts are sent to customers.
Make sure employees have access to the tech and support they need to work with the system. For example, if they’re using mobile credit/debit terminals, they need to work with their cell phones. What’s the process if they run into trouble and there’s a glitch?
Step 8: Do a Trial Period and Make Changes as Necessary
Some payment platforms offer trial periods. But even if yours does not, think of your first month or so as an experiment.
You want to make sure the payment platform is truly a good fit for your business. Solicit feedback from both customers and your employees. If something isn’t going right, make the necessary changes to fix it. That might include changing or adding payment methods. It’s better to do it earlier than to wait.
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Cashless Payment Methods
Different cashless payment options for home remodeling businesses were mentioned above. Let’s look at some of them in more detail. You’ll see some of these categories overlap with others.
Digital Wallet
Samsung Pay, Google Pay, and Apple Pay are all examples of digital wallets. The customer stores their credit or debit card information with these entities. Then when it’s time to pay, the digital wallet issues a token to the service provider instead of giving the actual card number.
Communication is typically done via cell phone using these technologies:
- Near field communication (NFC), where information is exchanged by two devices placed close to each other
- QR codes, which can be scanned to make a payment
- Magnetic secure transmission (MST), where a magnetic signal is generated between a device and a reader
here are several advantages to digital wallets. First, they’re fast for all involved. And they’re more secure for customers since they’re not actually giving out their credit card numbers.
Third, digital wallets store information that the customer has entered previously. So, there’s no need for the customer to pull out a card or remember their card number. It’s all in the wallet.
There’s another benefit for service providers. Authorization rates are higher with digital wallets, so you have fewer chances of an unpleasant payment decline.
To accept digital wallet payments on the spot, you need a special type of card reader on your mobile device. You can also accept digital wallet payments on your website (see more, below).
Contactless Systems
Digital wallets use contactless systems, as described above. But contactless systems aren’t unique to digital wallets.
Many credit and debit cards today use contactless systems too. “Tap to pay” or “tap and go” features allow customers to enjoy much of the same convenience as digital wallets. And they’re just about as fast for service providers.
Contactless systems use EMV chips in cards or NFC to communicate customer payment information. Even better, some now have tokenization to protect cardholder financial data privacy.
Mobile Payments
Both digital wallets and contactless payments are types of mobile payments. There are other types of mobile payments remodelers can use.
For instance, there are portable debit and credit card readers service providers can attach to a cell phone or tablet. These are often associated with a payment processor, like Square or Stripe. The payment processor acts as an intermediary between your business and the customer.
What’s the upside of these kinds of mobile payment terminals? They’re ideal for customers who don’t have digital wallets or contactless technology with their cards.
The downside? You should expect to pay a fee for using them. And you’re utilizing someone else’s technology. That can mean the opportunity for glitches, required upgrades, hardware failures, etc.
Peer-to-Peer Platforms
You’ve already read about some of the pros and cons of P2P platforms above. Let’s review the advantages and disadvantages of methods like PayPal and Zelle.
Pros:
- Customers may already use these platforms and have accounts.
- The learning curve is low, so it’s easy to get up to speed quickly.
- Fees may be lower than using some other methods of payment.
- Contractors know instantly when they’ve received a payment.
- Customers can pay right away after a job with a few clicks or taps.
- You can easily generate reports for any given time period.
Cons:
- You have to open accounts with all the platforms you plan to accept.
- Businesses may have to pay fees taken from their payments.
- There is an opportunity for human error (payment sent to the wrong recipient).
- Refunds are difficult to manage and may frustrate both parties.
- The third-party platform can close your account at any time for any reason, even when you have funds pending.
- Each method offers different deposit windows from instant to several days.
Online Payment Gateways
You may wish to have a way for clients to pay via your website. This is especially helpful for large remodeling projects or when taking a deposit for things like appliances.
Clients will surely appreciate this when transferring large sums of money. And having a gateway integrated into your website will make report generation and data collection easier.
The biggest downside to this method is customers paying after the fact. You don’t want to get in the habit of issuing an invoice and waiting for a payment later. In fact, you might offer a small discount in return for customers paying in full early or within 24 hours of receiving a bill.
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Top Takeaway Tips for Home Remodelers Going Cashless
Are you ready to start going cashless with your home remodeling business? Here are some steps you can take right away to get the process started.
- Cashless transactions should be convenient for both you and your customers. But you may not know what convenience means for clients. You can always survey them to ask what types of cashless payment methods they’re already using.
- You probably have a lot of industry connections as a home remodeler, like plumbers and electricians. Which systems do your colleagues use to receive payments? What do they like or dislike about their platforms?
- If you serve an older client demographic, cashless payments may not be as familiar as with younger people. Be prepared to help them with information on how cashless transactions work. They may still want a paper receipt on the spot. You can create one as a courtesy independent of your electronic accounting system.
- Expect a few snafus or some resistance from clients at the start. The goal of customer satisfaction and repeat business trumps rigid adherence to going cashless. So, until your system is up and running normally, you may have to weather a few late payments or quietly allow the odd check or two. It may help to think of your transition period as a temporary window where hybrid payments are accepted.
- Don’t forget that you may be mandated by your location to still accept cash payments. Just try to minimize them as much as possible in lieu of cashless options.
- Be sure to explain to customers why you are going cashless. It’s not just for your company’s ease of use. Let them know about how it makes transactions more secure for them too. The more they feel cashless, the more they’ll use it and make your operation much easier.
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