Cash is king when it comes to tips, says the NHBF

A recent survey of almost 400 NHBF Members has concluded that when it comes to tips, cash is still greatly preferred.  Even though clients are increasingly paying their bills by card, including contactless, leaving tips by card creates headaches for salon owners. 

Many salon owners have seen a decline in clients leaving tips.  One in four salon owners commented that clients feel they’re already paying enough for their service or treatment, especially in salons which have had to increase their prices to cover the rising costs of wages and pensions.  A small minority said that tips are old-fashioned.  But almost half (46%) said that clients appreciate great service and are happy to show it by tipping. 

Yet 49% of salons said that nowadays clients pay by card and don’t have cash for tips.  Most salons are reluctant to accept tips by card because it makes their payroll more complicated because of sorting out the tax which is payable. 

If clients want to leave a tip, the solution for many salons is to ask clients to leave a tip in cash which is directly passed to stylists or therapists.  Declaring tips and paying tax on them is also then the responsibility of the individual team member, not the salon owner.  However, several salons commented that they end up short of change because of clients requesting change so they can leave a cash tip. 

From previous surveys we know our Members fully support tips being passed on in full to team members and for it to be clear and transparent to both clients and team members how tips are treated.

Hilary Hall, chief executive of the NHBF, and Martyn Maxey from Martyn Maxey Hair in London attended a round table meeting hosted by the Department for Business, Energy and Industrial Strategy (BEIS) to discuss future legislation which will require 100% of all tips to be passed onto team members without any deductions except tax.  Hilary said, “From previous surveys we know our Members fully support tips being passed on in full to team members and for it to be clear and transparent to both clients and team members how tips are treated.  It’s important though that any new rules are user-friendly for small businesses.”

Martyn Maxey from Martyn Maxey Hair in London said, “We no longer accept tips at all.  We can go for a couple of weeks without any cash coming into the tills as our clients all pay by card.  If we take tips by card, we have to sort out tax, and there are also card charges to factor in.  And even getting a cash float from the bank costs us £3 for every £100 we take out.  These little costs can all add up to as much as 5%, which makes a big difference in a small business.”