Every few months, another article comes out celebrating the "death" of the paper check. Paper check writing is definitely on the decline. In 2000, Americans wrote more than 37 billion paper checks. And just 10 years later, the number fell to 18.3 billion.
But 18.3 billion of anything is hardly a mortal wound. And experts predict that the paper check writing tradition won't completely die out until 2026.
Paper Checks Still a Favorite among Small Businesses
A surprising percentage of businesses (large and small) still pay a portion of their expenses using paper checks, and the trend is particularly prevalent among small businesses.
1. Familiarity & Comfort
Probably the biggest reason why so many small businesses still use paper checks is familiarity. They already know how the process works and don't feel comfortable transitioning to electronic payments.
Even many businesses that do feel comfortable delay switching because their suppliers or customers aren't ready to make the change. An estimated 26 percent of American consumers still rely heavily on paper checks — a number that disproportionately favors senior citizens and shoppers wary of technology.
2. Cash Flow Management
Some small businesses actually prefer cash checks because they take so long to process. These delays make it easier to keep cash on hand for more immediate expenses. This partially explains why nearly 50 percent of small businesses have yet to embrace direct deposit.
3. Hidden Costs
Lastly, many small businesses are simply unaware of paper check-writing’s financial cost. When you factor in the resources required to cut, send and process a standard business check, American companies spend anywhere from $4 to $20 on each paper-based transaction.
They are either unaware or skeptical of these hidden costs — precisely because these costs are hidden.
Should Your Company Continue Using Paper Checks?
There are compelling reasons to abandon paper checks altogether. But for many companies, paper-based transactions still play an important role (for the reasons outlined above).
If you’re unsure which payment option makes the most sense for your business, consider making both available. Allow e-payments for those employees, suppliers and customers who want to use them, and allow paper check writing for the remainder (assuming that the added benefits justify the higher cost).
For help managing paper-based and/or electronic payments within your company, or to learn which payment options may be right for you, contact us today for a free consultation.