Writing checks has been an integral part of running a small business for well over a century – as essential to an entrepreneur’s operations as turning on the lights or balancing the cash drawer. And for most of that history, hearing “the check is in the mail” was like a vote of confidence. Small business owners didn’t worry about delays or identity theft.
While fewer consumers are writing checks at the grocery store or gas station, small business owners continue to depend on checks. In fact, the latest data from the Association for Financial Professionals (AFP) shows that B2B payments by check increased between 2013 and 2016.
But as times have changed, evolving technology has given small business owners faster, more efficient tools – consider the way that e-mail has revolutionized communication for entrepreneurs. Why shouldn’t sending checks be just as efficient?
Here are six reasons why small businesses are stepping away from the mailbox and moving toward safer, easier, cheaper and greener alternatives.
Paper opens the door to fraud
According to a 2018 survey conducted by AFP, fraud attacks against payment systems continue to persist. Vulnerability to fraud increases with the number of times a payment is touched. A mailed check can be touched by as many as eight people during its lifecycle. Fraud can also occur when the same person is responsible for approving and writing the checks. There’s just not enough control to ensure everything is above board.
To protect against fraud, small businesses want more secure payment options that don’t require sensitive information from the payee, have limited touchpoints and offer multiple layers of control. Not all digital payments, however, are created equally; for example, many common e-payment services require the sharing of bank data, which can increase the risk of fraud.
Paper takes patience
Paper checks are slow, especially when combined with snail mail. It doesn’t take much time to put a check in the mailbox, but writing the check, getting it signed and waiting for it to reach its destination can take a while. Checks can be lost or compromised in transit, and your account information can end up in the wrong hands.
Paper slows down all processes it touches. Entrepreneurial businesses prefer direct, timely delivery to prevent checks from getting lost in the mail.
Paper’s cash flow conundrum
When the check is in the mail, funds are trapped in transit for an average of two days. If you’re away from your office or store and need to make a payment on the spot, you’ll have to expedite it and pay a hefty courier charge.
Small, growing businesses want a flexible payment option that gives them control over their funds and the speed to time disbursements to the last possible second. For fast growth companies, cash flow is king!
The hidden fees of paper
If your company pays by mailing checks, you may be paying more than you expect. Bank of America estimates the cost of issuing a paper check can range anywhere from $4 to $20, based on the price of the check and shipping, plus the time employees spend writing, mailing, collecting and reconciling the check. The cost of postage alone can add up to a good chunk of change. According to Bill.com, businesses spend $235 on postage to mail 500 checks.
To counter high overhead costs, businesses are looking for a payment solution that eliminates the added expense of envelopes and other supplies needed to send checks.
Paperless payment solutions drive efficiency
From online reservations to using workflow apps, businesses are taking steps to make their operations more efficient. They are embracing new technology, connecting with tech-savvy consumers, delivering a superior customer experience and making sales.
To keep the momentum going, they need a payment solution that retains the wide acceptance of a check, offers digital speed and security and the simultaneous delivery of remittance information, but does not require businesses to modify systems and processes. One such solution is Deluxe eChecks.
With eChecks, payers send payees notification emails with links to secure sites housing their checks and remittance information. Payees access and print checks on their printers, and deposit them at their financial institutions like any other paper check. No sensitive information is required from the payee and the transaction takes place at the speed of email.
By Vijay Balakrishnan, Vice President of ePayments for Deluxe Corporation