A recent article featured on the Proformative Website explores the possibility of the extinction of paper checks in the near future. The article cites the Philadelphia Fed Study, which found that since 2009, paper checks have been dropping by 1.2 billion annually. If the reduction of paper checks continues at this rate, the projected date at which paper checks will no longer be used would be some time in 2026, just over a decade from now.
While it’s uncertain if paper checks will in fact become extinct, what we do know is that there has been (and continues to be) a dramatic shift in payment processing. Innovations such as electronic banking, person-to-person transfers, and pre-paid debit and credit cards have drastically reduced the use of paper checks.
Besides keeping up with the times and reducing paper waste, shifting your business’s invoicing system to a paperless system is a great way to optimize your invoicing process and save time and money along the way. Eliminating paper checks will not only reduce costs and speed up your payment processes, but a faster and more efficient processing of your payments will also help to improve business cash flow.
If your business is still cutting paper checks, here are three very good reasons to ditch paper checks now, even before they become “officially extinct.”
Paper Checks Inevitably Turn Into Electronic Checks
Thanks to the Check Clearing for the 21st Century Act, most banks utilize digital images of checks for processing. Before, checks would have to be mailed from bank to bank for processing to make deposits. Now, banks scan the check images and use the digital copies for processing. Additionally, many banks now officer a remote deposit option either online or through smartphone applications. Processing checks this way speeds up the rate at which checks can clear accounts. So why bring in a middle man by using paper checks? Skip this step and utilize electronic methods, as your physical paper check will become digitized eventually.
Save on Paper and Postage Costs
Factor in the cost of ink, paper, envelopes, and postage and you’re looking at a lot of money going out the door, just to make payments. Postage has rising steadily over the years and will most likely increase more as physical mail slowly gets replaced by electronic methods. Utilizing electronic payment methods (credit cards, electronic wire transfers, bill pay, etc.) helps save on costs of printing and mailing physical checks. Plus it enhances security as there is no risk of the check getting delivered to a wrong address or simply “getting lost in the mail.”
Reduce Transaction Delays
Think of it this way –if you cut a check and mail it, it takes a day or two to get delivered, and possibly even longer until the check is cashed. Even if hand-deliver the checks, there is no guarantee that it will be cashed that day. Electronic payments are faster, more efficient, and ensure that there is no hold up in between when you logged the transaction in your books and when the money leaves the account – which in turn, helps improve your business cash flow.