What should you do if your employee requests cash payment?
Despite moving toward a cash-free world, cash remains a legal tender. If your employee insists on getting paid in cash, you can only entice them to a more cost-effective electronic payment. But if you do not accept this, you can do nothing but pay it in cash. Of course, this is not a problem if you also get your earnings in cash, since you have a cashier. But what if you need to switch your employee’s salary from your bank account to cash?
Here are some solutions that can help you
First, you can withdraw the amount of cash you need with your company credit card . For a micro-enterprise, cash withdrawal from one to two employees can fit into your credit card limit (meaning that your company bank account has 1-2 free or discounted cash withdrawals per month), so it can be the cheapest to cash out at your bank’s ATM. However, this may not be the solution for larger companies, where paying more employees for cash usually requires a much larger amount of cash than the daily limit of a corporate bank card.
Therefore, a second option would be to withdraw cash from branch offices , which will probably be more expensive than credit card, but at least not unlimited. However, if you would like to withdraw more than $ 1 million, consult your bank in advance as to whether the withdrawal of the required amount must be announced in advance! If you unexpectedly set a higher cash requirement than you would bet without announcement, you may not get the expected amount. You should also be aware that if you announce in advance but do not pick up the cash on the indicated date, you will usually be charged all fees to your bank account to cover the transportation and safekeeping of a larger amount of cash.
Another problem is having to go to the bank for cash, queuing for it, and wasting time on the job, not to mention it is not safe to cash in on a lot of cash. Therefore, as a third option, we recommend that you use a convenient company bank account to pay by postal money order , which can be achieved at large banks. This feature allows you to make payments at the office while sitting in front of your Internet bank, while your employee receives the money from the postman.
Below we look at the amount that banks provide for this service and whether it is competitively priced with the cash withdrawals at the branch.
Postage vouchers bleed due to high combined bank and postage charges
The following table summarizes the fees charged by the largest banks.
In the calculation of the fees, in our example, we calculated the net payment of $ 150 thousand by six employees, thus withdrawing $ 900 thousand for cash withdrawals at bank cash registers, and bank and postal fees of 6 $ 150 thousand vouchers for postal money orders. Of the amounts indicated on the voucher, the postage fee (assuming bank transfer via data transfer) is uniformly 6 × 1,475 dollars, ie a total of 8,850 dollars at each bank. Which bank did not specifically state in its announcement, there was a non-cash financial transaction tax.As can be seen from the table, we found only one bank among the big banks, where in the present case it is cheaper to pay by postal money order than to withdraw cash from a branch. But there, too, withdrawing money is expensive compared to other market players, rather than sending vouchers cheaply.
At the same time, it can be seen that the postage fee is fundamentally responsible for the relative high cost of a postal order, since without it (or reducing it), the cost of a voucher service would be much more competitive than a cash withdrawal from a branch. There are two banks that charge a small fee for vouchers in addition to the postage of $ 8,850, as opposed to the typically high cash withdrawals at bank branches, usually around $ 8,000.
After all, it’s cash-free for you
Even if the end of the story is a bit bitter with regard to using electronic money management and advanced internet banking services for cash withdrawal, if you pay your employees with a postal money order, you do not have to manage cash.
Plus, you have a few more options. If your employee is working during normal working hours, so you can only pick up money after office hours, when you have to go to the post office and queue separately, then the easiest way is to apply for money at your workplace. The post office will deliver the amount two business days after you send it if you send the order by the banking deadline of the current day. Some banks also allow you to transfer payment order details directly to the post office.