Cash vs. Encashment — What's the Difference?
By Fiza Rafique & Urooj Arif — Updated on April 8, 2024
Cash refers to physical money, while encashment involves converting non-liquid assets into cash.
Difference Between Cash and Encashment
Table of Contents
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Key Differences
Cash is physical money in the form of bills and coins, used for transactions and stored as a physical asset. Whereas encashment refers to the process of converting non-liquid assets, such as checks, bonds, or vouchers, into cash, making it available for use or investment.
While cash serves as a medium of exchange and a store of value, allowing for immediate transactions, encashment is a financial activity that involves banks or financial institutions to liquidate assets or financial instruments.
Cash is universally accepted for transactions and is considered the most liquid form of asset. On the other hand, encashment requires a procedure and sometimes a waiting period, depending on the asset being converted and the policies of the institution handling the transaction.
The role of cash in everyday transactions highlights its importance in the economy as a direct means of purchasing goods and services. Encashment, however, plays a crucial role in financial management, enabling individuals and businesses to access the value tied up in non-liquid assets.
The availability of cash is immediate, allowing for its use in transactions without the need for intermediaries. In contrast, encashment processes vary by the type of asset and can involve fees or charges, reflecting the effort to convert an asset into cash.
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Comparison Chart
Definition
Physical money in the form of bills and coins.
The process of converting non-liquid assets into cash.
Usage
Used for immediate transactions.
Involves financial activities to liquidate assets.
Form
The most liquid form of asset, readily available.
Requires a procedure and sometimes a waiting period.
Role in Economy
Direct means of purchasing goods and services.
Enables access to the value of non-liquid assets.
Availability
Immediate availability for use.
Depends on the asset and institution policies.
Compare with Definitions
Cash
Represents the most liquid asset.
Having cash on hand means immediate financial flexibility.
Encashment
Converting non-liquid assets into cash.
Encashment of a check can take a few days to process.
Cash
Physical money used for transactions.
She paid in cash for the groceries.
Encashment
Can require a waiting period based on asset type.
Encashing a large bond may require additional verification.
Cash
Serves as a medium of exchange and a store of value.
Cash in a safe deposit box retains its value over time.
Encashment
Involves banks or financial institutions.
Bond encashment is facilitated by financial institutions.
Cash
Universally accepted for transactions.
Cash payments are accepted worldwide.
Encashment
Process can involve fees or charges.
Some financial instruments incur a fee upon encashment.
Cash
Directly facilitates the purchase of goods and services.
Cash allows for immediate purchases without processing delays.
Encashment
Enables financial management by accessing tied-up value.
Encashment of savings bonds can fund a major purchase.
Cash
In economics, cash ( (listen) kash, or kaysh in AuE) is money in the physical form of currency, such as banknotes and coins. In bookkeeping and financial accounting, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately (as in the case of money market accounts).
Encashment
(finance) The payment in cash of a note, draft, etc.
Cash
Money in the form of bills or coins; currency.
Encashment
The payment in cash of a note, draft, etc.
Cash
Liquid assets including bank deposits and marketable securities.
Cash
Money paid in currency or by check
Paid in cash.
Cash
Any of various Asian coins of small denomination, especially a copper and lead coin with a square hole in its center.
Cash
To exchange for or convert into ready money
Cash a check.
Cash in one's gambling chips.
Cash
(uncountable) Money in the form of notes/bills and coins, as opposed to cheques/checks or electronic transactions.
After you bounced those checks last time, they want to be paid in cash.
Cash
Liquid assets, money that can be traded quickly, as distinct from assets that are invested and cannot be easily exchanged.
Cash
Money.
Cash
Cash register, or the counter in a business where the cash register is located.
Let me just bring these to the cash for you.
Cash
An instance of winning a cash prize.
Cash
A place where money is kept, or where it is deposited and paid out; a money box.
Cash
Any of several low-denomination coins of India, China, or Vietnam, especially the Chinese copper coin.
Cash
(transitive) To exchange (a check/cheque) for money in the form of notes/bills.
Cash
(poker slang) To obtain a payout from a tournament.
Cash
To disband. To do away with, kill
Cash
(slang) Great; excellent; cool.
Cash
A place where money is kept, or where it is deposited and paid out; a money box.
This bank is properly a general cash, where every man lodges his money.
£20,000 are known to be in her cash.
Cash
Ready money; especially, coin or specie; but also applied to bank notes, drafts, bonds, or any paper easily convertible into money
Cash
To pay, or to receive, cash for; to exchange for money; as, cash a note or an order.
Cash
To disband.
Cash
A Chinese coin.
Cash
Money in the form of bills or coins
Cash
Prompt payment for goods or services in currency or by check
Cash
Exchange for cash;
I cashed the check as soon as it arrived in the mail
Common Curiosities
What types of assets can be encashed?
Checks, bonds, vouchers, and other financial instruments.
What does encashment mean?
The process of converting non-liquid assets into cash.
Is cash immediately available for use?
Yes, cash is immediately available for transactions.
What is cash?
Physical money in the form of bills and coins, used for transactions.
Can encashment involve fees?
Yes, there can be fees or charges for converting assets into cash.
Why is cash considered a liquid asset?
Because it can be used immediately without conversion or processing.
What is the role of financial institutions in encashment?
They facilitate the conversion of non-liquid assets into cash.
Can encashment affect the value of the asset?
It can, especially if fees are involved or if there's a market fluctuation in the case of securities.
How is cash used in the economy?
As a direct means of purchasing goods and services and a store of value.
How does encashment benefit individuals or businesses?
It provides access to the monetary value of assets that are not readily spendable.
What determines the fees for encashment?
Fees are based on the type of asset, the institution's policies, and sometimes the amount being encashed.
Is encashment only done through banks?
Primarily, though some financial services and institutions also offer encashment options.
Are all forms of cash equally accepted?
Generally, yes, though some businesses may limit large denominations.
What is a waiting period in the context of encashment?
The time it takes to convert a non-liquid asset into cash, depending on the asset and institution policies.
Why might someone choose to keep cash on hand?
For immediate financial flexibility, emergency situations, or to avoid processing delays.
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Written by
Fiza RafiqueFiza Rafique is a skilled content writer at AskDifference.com, where she meticulously refines and enhances written pieces. Drawing from her vast editorial expertise, Fiza ensures clarity, accuracy, and precision in every article. Passionate about language, she continually seeks to elevate the quality of content for readers worldwide.
Co-written by
Urooj ArifUrooj is a skilled content writer at Ask Difference, known for her exceptional ability to simplify complex topics into engaging and informative content. With a passion for research and a flair for clear, concise writing, she consistently delivers articles that resonate with our diverse audience.
