In 2024, U.S. Businesses and Paper Checks
Despite being a global economic and technological leader, U.S. businesses across industries still rely on paper checks for supplier payments. According to the Association for Financial Professionals' 2024 survey, checks remain a dominant payment method. This reliance has significant downsides, including fraud, inefficiency, high processing costs, and a lack of real-time visibility into cash flow.
Check fraud is a persistent issue. Data from FinCEN highlights the vulnerability of U.S. businesses to check fraud via stolen checks in the mail. Key findings include: 44% of stolen checks were altered and deposited, 26% were used to create counterfeit checks, and 20% involved fraudulent signatures. These risks and the operational inefficiencies of checks make it clear that it's time for a shift.
U.S. businesses should resolve to phase out checks entirely as a supplier payment method. Practical, more secure alternatives are readily available. Automated Clearing House (ACH) transfers offer a low-cost, federally regulated bank-to-bank payment network. Additionally, with single-use and exact-amount features, virtual credit cards provide flexibility and security, allowing businesses to control supplier payments precisely. The rise of FedNow and Real-Time Payments may eventually streamline and help automate the payment process, eliminating delays and reducing risk.
Outsourcing supplier payment management is key for businesses seeking to enhance efficiency and optimize cash flow. Partnering with a specialized provider allows companies to automate payments, reduce processing costs, and minimize the risk of fraud while freeing up internal resources to focus on more strategic initiatives. The benefits include stronger compliance, better cash flow visibility, and significant operational cost savings and offset.
The first “modern” check appeared in England in 1659. As we approach 2025, now is the time for businesses to modernize their payment processes and transition to more efficient, secure methods.
Focused on Startup and Business Development
1 个月Thanks Pete. I, like you, haven’t written a check in years but businesses can’t seem to break away. In my opinion, for mid to large enterprises, a third party payment management company is the best solution….generally the customer executes an electronic transfer of funds to a designated bank holding account and the payment provider then executes the individual payments to each supplier per a customer-approved payment file. The payments tend to execute using virtual credit cards or ACH for speed, accuracy and to ease reconciliation with one-to-one transactions.
Entrepreneur, Business Driver, Executive Sales | Digital Transformation, SaaS
1 个月Bill, very interesting write up. I have not written a check personally in years. Even gifts now are venmo’d. Whst in your opinion is the best strategy a company might take to move digitally ?