SMEs reliant on cash

Thousands of UK small businesses would be forced to close if customers stopped using cash, new research reveals.

According to the study by Alliance & Leicester, 7% or 300,000 of the UK's small firms are so reliant on notes and coins they would face shutdown if customers switched to solely using credit or debit cards.

Another 17% of respondents admitted "significant changes" would have to be made if cash use was ditched, while 8% believed business growth would be stunted.

The report found hospitality and entertainment firms would be hardest hit by the demise of cash transactions with almost one in five believing they would be forced to permanently close their doors.

While many small businesses admitted to relying on cash for receiving payments, more than a third confessed it was also their own preferred way of settling bills. Only 21% said they use credit or debit cards for financial transactions.

Russell Carter, from Alliance & Leicester Commercial Bank, said: "The results of our survey highlight the important role the humble coin and note still plays for many UK businesses.

"Not only do many SMEs still say cash is their favourite payment method, many sectors in the UK rely on cash for the smooth running of their business and without cash many small businesses would be forced to close down."