Cash and Carry? Should You Be Wary?
In many ways, cash is indeed king. Prices are often lowered and terms are more favorable when the consumer has cash for payment. It is common for people to pay cash for goods and services. Cash is a favorite payment method of some unscrupulous and dishonest persons because they can deny payment was received and purportedly demand additional money. But cash payment can be good when you do not want to provide the payee with your financial information (ex: credit card info, bank account info).
Cash, in and of itself, is not a problem for the purchaser or provider of the cash. One concern about cash payments is the possibility that they leave no paper trail or indication of what they were paid for (or that they were paid at all……”what payment? We, ABC Car Dealer, did not receive any cash payment from Joe Consumer”). This can be resolved by the payer of the cash obtaining a receipt confirming payment has been made. In the case of a cash payment to a business the receipt should be on the business’ letterhead or some other document that contains the name, address, phone number of the business. Further the receipt should reference the goods and services covered by the cash. If the cash payment being made will result in full payment of the account or debt due the receipt should state this (ex: “account paid in full”, “no balance remaining”).
WARNING: If a contractor, repair shop operator, or other businessperson requires payment in full for labor and materials before the work is complete, stop! This is a red flag. Some contractors require full payment via cash prior to beginning work and then proceed to drag out the project and fail to provide complete and competent services. I dare say any legitimate business will not require full payment until after the work/project is complete. If you pay in full up front, doesn’t this reduce the incentive for a suspect contractor to provide the quality work you expect? Hmmm…….
When cash is paid to an individual a receipt should have the payee’s legible handwritten name and signature and some reference as to for what it is being paid (ex: “$200.00 paid as down payment toward purchase of 2009 Honda Accord vehicle bearing VIN 1J4HJ8310393”).
You make the call as to whether and how to document transactions paid in cash. If you are prepared to pay with cash consider this: the more you stand to lose (if the cash payment is “conveniently forgotten”) the more likely you should take steps to document the cash payment. Protect yourself.