The research, from Alliance & Leicester, shows that many businesses do not accept other types of payment, with more than half of respondents unable to take payments via credit cards (62 per cent) and 65 per cent not taking debit card payments.

While notes and coins are seen by businesses as easy to manage, other transaction methods prove more of a problem. Nearly half of small and medium-sized businesses surveyed (45 per cent) believe the cost of processing cheques and credit card payments is too high.

Russell Carter, head of cash marketing at Alliance & Leicester, says: ‘The ‘Cash Survey’ reveals that the popularity of cash to businesses remains strong because of its ease of handling and its suitability for small and medium-sized businesses. Despite this, however, many businesses are actually paying over the odds in cash handling charges.’

According to Alliance & Leicester, the average small business spends around £425 on cash transactions each year. One in seven UK businesses (14 per cent) say they still pay both wages and suppliers in cash and, more significantly, over a quarter (27 per cent) say notes and coins are an essential part of their cash flow management.

Related Cash transactions cost UK SMEs £9.4 billion each year