Yes you can set up two payment options.
One - Paypal
One - Cash.
In your form set up for example Radio Button options for user to select the payment option choice.
If they choose "Cash" the form skips to the form submission
If they choose "Paypal" the form continues through the payment process.
You'd set this up with two logic rules concerning the "cash payment" choice radio button
If the option is cash, then the action would be to skip any remaining pages go straight to submitting the form and 2) send the "thank you" email to the customer and notification email to the Admin.
Conditional Logic has been around in Machform for some time, but make sure you're using the most up to date version (6.0 released this month).