Encash vs. Cash — What's the Difference?
By Urooj Arif & Maham Liaqat — Updated on April 7, 2024
Encash involves converting a financial instrument into its cash value, while cash refers to money in the form of physical currency.
Difference Between Encash and Cash
Table of Contents
ADVERTISEMENT
Key Differences
Encashing is the process of converting non-liquid assets or financial instruments, like checks or bonds, into liquid cash. This involves a transaction where the asset's value is exchanged for its equivalent in physical money. On the other hand, cash itself is liquid currency, readily available for transactions and immediate use without the need for conversion.
While encashment typically requires an intermediary, such as a bank or financial institution, to facilitate the conversion, cash transactions can occur directly between parties without an intermediary. Encashing often involves verification and processing time, whereas cash is instantly verifiable and usable.
Encashment is particularly relevant in scenarios where assets are held in forms that are not immediately spendable or usable. Cash, however, is universally accepted for transactions, making it a more flexible and immediate form of financial resource.
The concept of encashing is inherently linked to financial instruments that have a promised value but are not in a spendable form. Cash, contrastingly, represents value in its most direct and universally recognized form, eliminating the need for conversion or the involvement of financial services to ascertain its value.
Encash and cash differ significantly in their implications for liquidity and immediacy of financial resources. Encashing may incur fees or delays due to the conversion process, whereas cash provides immediate financial liquidity without additional costs or processing times.
ADVERTISEMENT
Comparison Chart
Definition
Converting a financial instrument into cash.
Physical currency used for transactions.
Process
Requires an intermediary for conversion.
Directly used for transactions without conversion.
Time
May involve processing time.
Instantly usable.
Fees
May incur fees during the conversion process.
No additional fees for use.
Use Cases
Useful for liquidating assets or checks.
Used in everyday transactions and immediate payments.
Compare with Definitions
Encash
Encash is particularly relevant for non-liquid assets.
They chose to encash some stock options to fund their startup.
Cash
Cash is immediately available for use.
He always keeps cash on hand for emergencies.
Encash
The process of encashment may require verification.
The bank needed two days to encash her traveler's checks.
Cash
Cash refers to physical money in coins or notes.
She paid in cash to avoid credit card fees.
Encash
Encashment can sometimes incur a fee.
Encashing a check at a cash-checking service often comes with a charge.
Cash
Cash transactions don't require intermediary verification.
Buying a coffee with cash is a simple, direct transaction.
Encash
Encash means to convert a check or bond into cash.
She decided to encash her paycheck at the bank.
Cash
Cash is universally accepted for payments.
Vendors at the market prefer payments in cash.
Encash
Encashing involves turning any financial instrument into liquid funds.
He needed to encash his savings bonds to pay for repairs.
Cash
Cash provides immediate liquidity.
Selling goods for cash improves the business's cash flow.
Encash
To convert a financial instrument or funding source into cash.
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).
Encash
To turn into cash; to cash.
Cash
Money in the form of bills or coins; currency.
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 is cash?
Cash refers to physical money, including coins and notes, that is used for transactions.
Is there a fee for encashing?
Some encashment transactions may incur fees, depending on the institution and the type of instrument being encashed.
What does it mean to encash?
Encashing means converting a financial instrument or asset into its cash value, making it available for immediate use.
Can you encash any type of financial instrument?
Most financial instruments can be encashed, but the process and feasibility depend on the type of instrument and the policies of the institution.
Why is cash important?
Cash is important because it provides immediate liquidity and flexibility, allowing for transactions without the need for intermediaries or processing time.
How does encashing work?
Encashing involves presenting a financial instrument to a bank or institution, which then converts its value into physical cash, often after verification.
What are the benefits of encashing?
Encashing provides access to the cash value of non-liquid assets, making funds available for use that otherwise would not be immediately accessible.
Is encashing the same as cashing?
Yes, encashing and cashing are often used interchangeably to describe the process of converting a financial instrument into cash.
Can you directly spend a check without encashing it?
Generally, a check cannot be directly spent; it must first be encashed or deposited into a bank account to access its value.
What's the difference between encashment and depositing?
Encashment converts an instrument into cash for immediate use, whereas depositing places funds into a bank account, still requiring withdrawal to convert into cash.
Share Your Discovery
Previous Comparison
Leisure vs. Relaxation
Next Comparison
Intelligent vs. IntelligenceAuthor Spotlight
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.
Co-written by
Maham Liaqat
