With regard to its loyalty to check writing, doing business in the US seems to be something of an anomaly these days. Even though old habits die hard, and lack of integration between your electronic payments and accounting system seems to be holding you back, the trend is unavoidable. Most of Europe has already gone in the direction of digital payments and for good reason.
Here are five reasons why we think you should optimize your business’ vendor payments strategy:
A survey by mobile payment network, Dwolla, found that small and medium sized businesses spend at least 30 minutes handling each business check and that hard earned time could be much better spent. Certainly small businesses with limited staff might want to remove “walking to the post office” from the “to do” list. Writing checks may be viewed as a cost of doing business, but today’s technology has well and truly eliminated this need.
Direct and Indirect Costs
According to research by the Bank of America, the aggregate cost of a check is between $4 to $20, based on the price of the actual check and shipping, plus the time spent writing, mailing, collecting and its reconciliation. Businesses know the check system works and they feel comfortable with it, yet this comfort it comes at a high price. The Aberdeen Group reported an average cost of $7.78 per check and a survey carried out by Bottomline revealed the cost of processing a check costs businesses ten times more than an ACH transfer.
Managing the payment process
Vendor payments are probably the single largest non-payroll source of cash outflows in your business and yet once check payments go out, no one really knows what happens to them.
Cyber crimes may rule the headlines, but old-school check fraud is still the primary target of fraud on small businesses and even worse, it’s on the rise. 75% of organizations surveyed by the Association of Financial Professionals experienced check fraud in 2016. You might be asking yourself, how can fake, stolen checks be a major problem? The answer is: Because, it’s easy. Check fraud is often committed with counterfeit checks created with desktop publishing or through a process of chemical alteration. Victims include financial institutions, businesses who accept and issue checks, and of course consumers. A good place to start is phasing out paper check remittance or even better, going digital.
Transitioning your business to payment optimization
Nothing is more valuable to your business than meeting the expectations of your customers, vendors and the people who support you. These relationships propel your business forward. Automation of your payment processes doesn’t just impact your bottom line. It also helps you fine-tune and professionalize your business. Coming out of the black hole of manual payment processes while raising the bar across the board will definitely reap rewards.
If you are writing checks to vendors, now might be the time to reevaluate your payment method strategy and join the many businesses who want to optimize their vendor payment processes. At Melio, we are working hard to help small businesses take control of payment processes by smoothly transitioning from check writing to digital payments. We believe the time you spend manually handling checks can be better spent and yet we realize many of your vendors want to receive checks. Our system gives you a new level of flexibility. Melio lets you pay your vendors by bank transfer or credit/debit card even if they only accept a check. For more information, please visit us at meliopayments.com or sign up here for a demonstration of our digital payment system.