Cash payment definition
/What is a Cash Payment?
A cash payment is bills or coins paid by the recipient of goods or services to the provider. It can also involve a payment within a business to employees in compensation for their hours worked, or to repay them for minor expenditures that are too small to be routed through the accounts payable system.
Advantages of Cash Payments
Cash payments are preferred by those individuals not having a bank account, which includes those who do not have legal status to open an account. Cash payments are also preferred by those who are attempting to avoid reporting an income tax liability, which includes people who are operating an illegal business and those who are working in a country illegally. A further advantage is that cash payments made in a hard currency are preferred in inflationary environments, since these funds hold their value much better than the local currency that is subject to inflation.