You know it’s time to say goodbye to checks. They’re just so expensive and time-consuming to prepare. And with the USPS proposing to raise the rates on first-class postage from 55 to 58 cents on August 29th, check payments are likely to cost your business even more. This makes it a great time to shift to electronic payments.
Let’s face it, right now when you pay suppliers with checks, your accounts payable staff has to print them, chase down signatures, stuff, seal, and mail them. That is not only costing you money, but it’s also preventing your team from allocating their time better, to help with financial analysis, or strategic payment plans. Then you have the fixed costs of toner, paper, and postage – which may soon end up costing you more. All in all, it costs your business roughly $6 every time you issue a check.
Proposal Will Make Check Payments Not Only Pricier, but Slower Too
Not only is the post office proposing higher postage rates, but it’s likely that the mail will be slower too. While you might appreciate the extra time it gives you to float your payments, slower mail delivery increases the risk of incurring late payments and associated penalties. (Instead, an AP automation solution gives you control over payment timing so you can hold on to your cash for as long as possible, without the risks.)
Also, check payments increase your organization’s exposure to fraud, which is a growing problem that can result in losses of up to 5% of annual revenue for the average business. It may give you pause when you consider that 74% of companies using checks reported attempted or actual check fraud, according to the 2020 AFP Payments Fraud and Control Survey.
Yet, despite all this, and the ease and convenience that electronic payments offer – not to mention easier payment reconciliation, reduced fraud, and significant cost savings – some companies are still paying suppliers with checks. You can’t even pay them to switch. Seriously! Consider that every time you use a virtual card, your company earns a cash-back rebate, which for some companies has covered the entire cost of their payment system, was invested back in the business, or even transformed their AP from a cost center to a profit center.
6 Funny Excuses for Still Paying Suppliers by Check
So, what is it that’s preventing AP and finance teams from switching from checks to electronic payments? Here are six of the funniest excuses for still paying suppliers with checks:
- They like surprises. With manual check payments, you never know how long they take to process, when they’ll arrive in the mail, and whether or not you’ll get hit with late payments. You—and your suppliers—are always kept guessing.
- They believe fraudsters have to make a living too. Some people may feel sorry about putting fraudsters out of business. After all, they have to make a living too.
- They like working weekends. They figure when you have nothing else planned, why not spend your nights or weekends working? Especially when it’s raining. The checks need to get out, and you can spend your time folding, stuffing, and mailing them.
- They’re creatures of habit. Sending checks is something that they’ve always done, as well as their predecessors and those before them – as far back as they can remember. Checks were first used in Venice in the 1200’s. They figure that not much has changed with technology and invention since then. If it was good enough for them, it should be good enough for us.
- They think trees produce too much shade. They think it’s a good idea to chop down trees to create all the paper that’s needed for checks, and let more of the sunshine in.
- They always have an excuse when suppliers call. The good ole excuse that “The check is in the mail,” can come in handy when suppliers call. And, if you’ve used that too many times, you could always try, “My dog ate your check.”
Some Checks May Be Necessary but Electronic Payments Are Easier and More Convenient
We get it – there still may be some suppliers who require checks, so maybe you still have to issue some. But there is an easier way to incorporate checks in your payment mix. With an AP automation platform, you can issue checks easily and seamlessly, using a single workflow for all payment types. This saves your team time and money when making check payments.
In addition, most suppliers are now willing to accept electronic payments. Having faced their own cash flow issues during the pandemic, many will gladly accept virtual cards and other payment methods to benefit from regular, on-time payments. So, what are you waiting for? There’s no time like the present.
Check out “Getting Started with Electronic Payments” to learn more about how this digital shift drives a host of benefits, including improved cash management, reduced fraud risk, increased visibility and control, and strengthened supplier relationships.