Why Taking Cash in Hand Can Be A Bad Idea


Cash in hand work can seem enticing. No invoicing, no lengthy payment terms, and no need to tell the tax man. And you probably know at least a handful of people who are conducting “cash only” business without declaring it.

But cash jobs are a bad idea for any pest control professional. By conducting illegal business, you could be exposing yourself to enormous risk. Here’s more about the pitfalls of cash in hand as payment for work.

 It’s not uncommon for customers to offer cash, especially if they’re hoping for a discount in return. And it can be tempting, especially if you think you might lose the job if you don’t accept it. It’s hard to estimate exactly how big the “cash in hand” market is because, by nature, the income often isn’t declared. Official estimates have put the figure at approximately 3% of GDP, or a whopping 50 billion dollars per year.

Anecdotally, there’s plenty of evidence that the cash job industry is booming. So why shouldn’t you join in?

It’s important to note that a cash job isn’t necessarily illegal, or even bad. Cash is legal tender, and you can certainly complete a job, send an invoice, and receive your payment in cash. You’re not risking prosecution as long as you record it on your books and declare it as income. That is, you can accept cash but should still do everything through official channels.

However, if you’re thinking of taking cash in hand as a way to increase your income (without the authorities knowing about it) then you are breaking the law. To be clear, it’s the cash jobs that aren’t declared and don’t appear in your books which are problematic.

When it comes to the drawbacks of doing work for cash in hand, there are a few things to keep in mind.

Firstly, if you’re taking cash without issuing receipts or invoices, it will impact your sales management and measurement. Without accurate recording of sales, profits, expenses, and so on, it becomes much harder to track your results (among other business aspects).

Secondly, you’re exposing yourself to risk. If you have staff on your payroll and they’re taking cash payments on your behalf, how do you know they aren’t pocketing extra cash?

Plus, if you were ever to sell your business, not recording cash deals would undervalue it – potentially in a big way. Prospective buyers would pay less for it because you’ve given them no reason not to.

The last - and most obvious - drawback is that you’re potentially breaking the law. Put simply, receiving payment for work you don’t declare is illegal.

Is your insurance still valid if you’re paid in cash? If the job is done off the books, your insurance likely won’t cover you. Because after all, the job didn’t even happen in the eyes of the law. That means if you do a pest treatment and later find a customer complaining about their termite problem, you could be in big trouble if they sue you for damages and your insurance provider rejects the claim because of a lack of appropriate paperwork.

The bottom line is: keep everything above board. You can increase the amount of money you’re taking home by making the most of tax deductions for your business, reducing your business costs, looking at marketing ideas to generate more business, and implementing a whole host of other strategies.

You can read more about this topic, and others, on the Rapid Solutions blog here

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