As technology evolves, small businesses are now equipped with faster and more efficient tools. So why are many still relying on traditional paper checks? In this beginner’s guide, we’ll highlight the six main reasons why small businesses are now choosing to switch to safer, easier, cheaper and greener alternatives.
Fraud Prevention
According to a 2018 survey conducted by the Association for Financial Professionals (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. Similarly, fraud can also occur when the same person is responsible for approving and writing the checks. This lack of control opens the door to fraud and can put small businesses at risk.
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. To decrease the risk of check fraud, businesses are now adopting options like Smart Payables Outsource Payment Processing that offer MICR and laser check security.
Time-Saving
Writing, mailing, and delivering paper checks can take up valuable time and resources. While it may not take much effort to put a check in the mailbox, writing and signing checks, and waiting for them to reach their destination can take several days. This process can slow down important business transactions and prevent small businesses from responding to time-sensitive opportunities. By shifting to automated and direct payment systems, small businesses can save a significant amount of time and increase efficiency.
Cash Flow Management
When the check is in the mail, funds are trapped in transit for an average of two days. In addition, if you need to make a payment on the spot, you’ll have to expedite it and pay a hefty courier charge. For small businesses, having control over their cash flow can be critical to their success, especially if they are in a growth phase. By adopting a flexible payment solution, businesses can time their disbursements to ensure their cash flow stays positive.
Cost-Effective
The cost of issuing paper checks 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 quickly. According to Bill.com, businesses spend $235 on postage to mail 500 checks. These added overhead costs can add up, putting small businesses at a financial disadvantage.
By utilizing paperless payment solutions like Deluxe eChecks, businesses can eliminate the added expense of envelopes and other supplies needed to send checks. This can result in significant savings that can be redirected towards business growth.
Increased Efficiency
In today’s fast-paced business world, consumers are looking for companies that can deliver fast and efficient services. From online reservations to using workflow apps, businesses are taking steps to make their operations more efficient. To keep up, small businesses 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, which allows payers to send payees notification emails with links to secure sites housing their checks and remittance information. Payees can then 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, increasing the efficiency and effectiveness of small businesses.
Environment
As businesses look for ways to be more eco-friendly, paperless payment solutions are becoming more appealing. By transitioning to electronic payments, businesses can reduce their paper waste and lower their carbon footprint. Furthermore, paperless payment solutions result in less energy and fuel consumption, as less mailing and courier services are required. By making the move to more sustainable solutions, small businesses can have a positive impact on the environment and improve their public image.
Conclusion
As small businesses continue to evolve, finding ways to streamline operations and improve efficiency is crucial. By transitioning to paperless payment solutions, businesses can save time, reduce costs, minimize fraud, increase efficiency, and be more eco-friendly. From automated ACH payments to digital eChecks, small businesses have options to select payment services that fit their specific needs and budget, empowering them to focus on what matters most – growing their business.
