I recently had a listener reach out asking for some insight on how to handle “cash offers” from clients. Honestly, it struck me as an interesting and important topic to dive into. As we’ve discussed in past conversations, the residential construction market is becoming increasingly competitive. The cost of doing business has gone up, the cost of living continues to rise, and clients are looking for any way they can to leverage a better deal. One tactic we’re seeing more often is clients offering to pay cash in hopes of sweetening the pot for the contractor.

On the surface, it might seem harmless, even appealing. After all, who doesn’t like the idea of getting paid quickly, avoiding credit card fees, or cutting through some of the administrative red tape? From the client’s perspective, offering cash feels like a win-win: a quicker transaction, maybe a small discount, and less paperwork. Sometimes, let’s be honest, they’re hoping it means the contractor might handle the transaction off the books entirely.

But as a contractor, accepting cash offers without proper documentation can open you up to serious risks. First and foremost, cash deals often lack a formal paper trail. Without a signed contract or proper invoicing, you’re left with no clear agreement on scope of work, payment schedules, change orders, or warranty terms. If a dispute arises and they always do, you have little to no legal standing to protect yourself.

There are also significant tax implications. Whether it’s cash, check, or electronic transfer, all income needs to be reported. Skirting around this creates major problems with the IRS if you’re ever audited. Beyond that, cash transactions don’t protect your business the way formal payment systems do. Deposits and progress payments through banks or merchant services leave a digital footprint, which helps validate the transaction in case of legal or financial questions later on.

 An additional note is that most of my work qualifies as non-taxable capital improvements, so conceding to a cash discount would literally cost me money, not save it. When clients offer cash in exchange for a discount, they’re not recognizing that it would actually eat into our margins rather than provide any meaningful business advantage.

More broadly, I believe strongly in operating a legitimate business. One that’s rooted in transparency, professionalism, and ethical practices. This ensures protections for both sides, builds long-term trust, and aligns with the quality of service we promise. It also helps clients self-qualify. The ones who truly value a professional, well-run business understand these standards. They aren’t looking to cut corners, they’re looking for partners who do things the right way.

The bottom line? Cash offers aren’t worth the risk. Stay professional. Insist on contracts. Get everything in writing. Use legitimate payment methods. Protect your business the same way you protect your craft, with care, consistency, and the long view in mind. To entertain a cash offer from a client means that this client is not a fit for you or your business. Set aside all of the potential legal ramifications, this client is looking for a deal. They do not value what you do as much as saving a few dollars, and to me that means you need to move on and find a more ideal or better fitting client.