8 Pros And Cons Of Paying Your Employees In Cash

In olden times goods and services were obtained by means of a barter system. In the barter systems, goods were exchanged for other goods. For instance, if you wanted milk and had eggs and someone else had milk and wanted eggs, you could have to exchange milk for eggs. This system obviously had many problems as two or more people would have to have similar wants at the same time for a satisfactory exchange. So to overcome the challenges of the barter system, modern money emerged.

Money As A Medium Of Exchange

Money, that is the currency notes and coins, are a well-accepted medium of exchange. Most payments happen in the form of currency notes. If you, too, want to dispense cash at a bank counter or to your employees, you would need a machine for counting cash. You can view more on the internet if you wish to know about a cash-counting device.

Reasons To Pay Your Employees In Cash

Is Commonly Acceptable For Everyone

Many countries of the world are encouraging digital payments; however, cash remains the most acceptable form of money. Older adults are not quite comfortable with the use of digital payment wallets; hence if you pay your employees in cash, they will find it very convenient to pay their bills as cash is well accepted by everyone.

The payment of money using digital wallets needs good quality internet services. Many places in the world do not have good internet penetration, even today. In fact, there is a very high disparity in internet penetration between the rural and urban regions of the world. Hence, cash can be easily transferred and used all over the world, but digital payment wallets have comparatively limited usage.

Again unlike modern currencies like cryptos (bitcoins, ethereum), most currency notes and coins are guaranteed by the federal bank of the government. So if a currency note is real, there is no question of that note losing value as cryptos do.

Protects The Privacy Of The Employees

Many people prefer taking payments as cash, as dealing in cash requires fewer compliance norms. When money is transferred digitally, then the employees must have a bank account or a digital wallet. Opening a bank account comes with KYC (Know your customer) norms.

These forms require a person to reveal a lot of personal information. Again, digital wallets require a person to share multiple passwords and link bank accounts etc. Many people do not like to share their information with bank authorities or share their personal information on the internet.

They fear that scammers might gain access to this information and dupe them in the future. So if you wish to protect the privacy of your employees, you can pay them their salary in cash.

Require Fewer Compliance Norms

When payments are made in cash, compliance norms are much easier. Many small transactions can happen without entering them into the account and audit books. These small transactions may not impact the overall accounts of your company to a great extent, but they are quite notorious for complicating the day-to-day calculations. Hence, if payments are made in cash, then the compliance norms decrease to a great extent.

Reasons To Not Pay Your Employees In Cash

Helps In Maintaining The Balance Sheets Of Your Company

Any company, big or small, has to maintain balance sheets. When the payments are made in digital mode, then the computer can make automatic entries (additions and deductions) into the main balance sheet of the company. However, when the money is paid in cash, the accountant might have to manually enter data in the balance sheet of the company every time a payment is made.

Increases The Safety Of Transaction

It is not safe to carry a lot of cash physically at any point in time. Your employees might get robbed on their way back home after they have been paid their salary in cash. However, if their payments are made digitally, then they cannot be robbed by thieves.

Even if someone gets access to their credit cards or their mobile phones, they will not be able to retrieve the money. This is because digital wallets and cards require multiple PIN numbers to operate, which the thieves will not have access to.

Saves Time

If you are paying your employees in cash, then a lot of time has to be paid in calculating the money. A cash-counting device can make the process much easier, but it still requires more time than dispensing the money digitally through a payment wallet.

It Is Easier To Pay The Exact Amount To Your Employees

At times the employees might need to be paid in round figures, but if they need to be paid in coins or decimal amounts, then that becomes a problem when paying in cash. However, when someone is making a digital payment, then you need not worry about the availability of the exact denomination of coins; you can make the exact payment from your digital wallet.

Furthers Your Employee’s Investment Goals

Most people invest their money after spending for their regular requirements like groceries, rent and monthly EMIs. Most of the investments happen in the form of investing in mutual funds (share markets) or by buying cryptos or land assets etc.

Now, if your employee has hard cash, then he will eventually have to deposit it in a bank or to any financial agency to make further investments. However, if your employee has the money in a digital wallet, he can simply transfer the money to a bank account or to a mutual fund agency for further investment.


Paying your employees in cash has many advantages like its widespread acceptability, its ability to safeguard your employee’s privacy etc. However, there are some disadvantages as well, like the fear of theft, difficulty in reinvesting the salary etc. However, there are pros and cons to everything, and the method that you choose to pay your salary to your employees depends on your particular needs and priorities.

Ricardo is a freelance writer specialized in politics. He is with from the beginning and helps it grow. Email: richardorland4[at]