In cannabis, the term “COD” is commonly used to describe when a seller expects to be paid, cash on delivery! And while there has been some transition towards checks or bank-to-bank transfers, in most transactions cash is still king. In an industry that lacks access to traditional banking and financial services, cash is historically the main form of payment for both B2B and B2C transactions involving products.
However, cash handling comes with increased costs, risk of theft, risk of robbery, and declining safety for staff. In almost every state market you can find examples where companies are targeted for their cash holdings. Robberies are common and unfortunately, employees have lost their lives as a consequence. We firmly believe that you cannot put a price on someone’s life and well-being and the industry must take steps to mitigate this risk from every step in the wholesale to retail supply chain.
At Apex Trading we offer several financial services that remove physical cash from the equation. We previously wrote about our wholesale order financing options for both buyers and sellers. If you missed that – check it out here. While our financing is amazing and provides a ton of value, in this blog we are going to discuss another cash solution – Pay Now ACH payments – available on Apex Trading.
Risks Associated with Cash
Let’s begin with looking at the problems with cash handling and processing for businesses.
Cost – According to global research and advisory firm IHL Group, the average cost for cash handling and processing is 9.1% of cash received. For example, if you sold $1,000 of product, the cost for receiving and depositing that cash could be as high as $91. Keep in mind, this cost doesn’t account for the cash deposit fees that a bank charges a cannabis companym which do not apply to other industries. Given those fees, the cost increases to as high as 12-15%.
Theft – According to the US Department of Commerce, $50B (yes Billion) per year is lost to employee theft and causes 1 in 3 bankruptcies. Even worse, a study by the National Institute of Justice found that 80-100% of cash shortages are due to dishonest employees. A study by Arthur Young, Inc. showed that 39 percent of employee theft occurs at the point of sale.
Safety – Everyone can agree that transporting valuable product or cash presents a substantial risk to employee safety and governmental interference. Most companies cannot afford secure cash transportation and must rely on their employees to deliver products and collect payment. This cash collection is then stored for multiple days or weeks in a safe at the business, which becomes a target for criminals. In Washington State alone in 2022, there have been over 50 robberies of cannabis businesses, many of them armed. Even worse, several of these robberies resulted in 3 people being murdered.
How Apex Trading is Solving these Issues
As a wholesale platform, Apex Trading provides the ability for a seller and buyer to transact through our software and pay via direct ACH bank-to-bank transfer with the Pay Now feature. Utilizing this financial tool addresses all of the risks previously associated with handling cash.
Cost – To set up and use Pay Now payments within their account, a seller incurs no fixed costs and is solely charged a 1.5% (starting rate) ACH fee. This saves the seller up to 13% compared to handling cash.
Theft – When cash is removed from the equation, cash theft is eliminated as well. While I’m sure you trust your employees who are currently tasked with cash handling, mistakes and dishonesty may occur so use our service to remove this risk.
Safety – For both wholesalers and retailers, the less cash they have on-hand means less risk there is to the safety of their staff. Imagine not having to transport large amounts of cash back from a drop or to the bank where you pay those high deposit fees? If you’re currently relying on secure transport this cost would be significantly reduced or eliminated .
To learn more about how Apex Trading’s wholesale business management software can help your cannabis company with inventory, order and sales management, we encourage you to visit ApexTrading.com or request request demo by clicking here.