Are you still using paper checks to pay your vendors and employees? You may be wasting money and time by following this practice.
Blackline has found that 78% of medium and large businesses are still using paper checks for 78% of their suppliers. However, using paper checks costs small businesses an incredible amount of money every year, in the way of maintenance and repair, cost of the paper checks and other labor and supplies to run them. If you are one of these companies, you should look into your costs for using paper checks and see if you can improve your profit margin by making a change.
Are You Losing Money?
Accepting checks from your customers means that you wait longer for money to deposit in your bank account. It is also true that the average invoice cycle when checks are used to pay bills is almost 18 days. If you mail out an invoice to your customer and they mail back a check for payment, you run the risk of those mailings getting lost in the mail. Even if the postal service processes and delivers everything efficiently, you still need to wait to receive the check, deposit it and wait for the check to clear. Many accounting departments make their bank deposit physically by taking it to the bank. If this is your practice, you are also spending money on the transportation to get there.
As an alternative, if you bill your customers electronically by email or online, you can get paid immediately. Money gets deposited within 24 to 48 hours, and you can track it electronically without any extra paperwork. Your accounting department uses fewer labor hours to process your payments and receipts.
Increasing numbers of vendors are moving to online payments for these reasons. Electronic billing is quicker, simpler and lowers the use of paper. It helps improve your accounting cycles and in turn, you can then pay your own invoices faster.
If you operate a B2C company, then offering more methods of payment to your customers will attract a wider range of people. People under 30 are familiar with paying via digital methods and prefer paying online or using their mobile devices. By sticking with paper checks, you may be losing out on the business of the younger generation.
B2B businesses are also adopting this method of payment and accepting payments. Comparing your alternatives may give you a way to lower your costs and increase your profit margins.
Another issue with paper checks is the problem of fraud. Paper checks offer a larger opportunity for fraudulent payments. Checks do not get logged in or tracked as quickly as electronic payments, leaving your company open longer to problematic payments, discrepancies or spending patterns. Since fraud is always an issue for businesses, eliminating it as much as possible is beneficial.
Paying employees by paper check, especially if you mail them out is costing you a great deal of extra money. You can eliminate the cost of paper and postage by using automatic bank payments from your bank to your employees’ banks. You save even more money if you can make a similar arrangement with your vendors and suppliers.
You can learn more about paying and receiving electronic payments by contacting Supplier Works. SupplierWorks can offer solutions for your business to help you manage your payments in a more efficient manner.