"From Paper to Pixels: Why Virtual Cards are the Future of Payments"

?About 50% of businesses still use checks as their preferred bill payment method.?

This is surprising since 93% of all payroll is transferred via direct deposit and only 3% by check. ?For personal business transactions, only 25% of Baby Boomers, 15% of Generation X, 7% of Millennials, and <1% of Generation Z use checks as their preferred method for making payments.?

So why do 50% of businesses still use checks??

It’s familiar, or in other words, that’s the way they’ve always done it. As a business consultant who helps businesses achieve better financial results, these words are akin to poison to me.? But I get it.? It’s not uncommon for a business to launch, get a checking account, and never change because of so many other needs.? The process appears to be ok, so why make a change?

Are checks still safe and efficient?

Hardly, this is not the year 2000. Checking fraud is much easier with sophisticated check-altering or check-washing equipment that bypasses the best bank positive-pay systems. I worked for a company that had a $1,000 check altered into one that cleared for more than $100,000. The check had been stolen before it reached the vendor, altered, and cleared a Canadian bank. There was no recourse for recovery.

Safeguarding your personal and banking information is also essential. Every check you send out has your mailing address, name, bank routing, and account numbers on it. I advise my clients not to broadcast that type of information.? Nowadays, most people scan checks into bank deposits and throw out whole checks, so your information is readily available for enterprising thieves.? ?

So why do 50% of businesses use electronic payments??

More secure:

Electronic payments are more secure than ever. When you employ a payment company to handle payments, the payment company is responsible for transferring the funds, not a slip of paper.

Greater Control:

A hands-on owner can approve every payment and control when it occurs by scheduling payments for later dates. So you can take advantage of payment discounts or plan later payments.

You have greater control over your approved vendors and payment timing. You can also set up approval-level workflows that allow personnel some autonomy but still require controls of your choosing.

How not to do it: One company I worked for issued bank credit cards to “key individuals” for company purchases. This program did not have proper controls, and the purchasing processes were ignored.

The “key individuals” list seemed to grow almost daily.? In one case, a card had been copied and supplied to several people! Spending quickly got out of control, and purchases were not going to preferred vendors with the best pricing and value.? The company lost control of its purchasing, and its costs skyrocketed until it shut down the cards. ?

Be sure to use a payment company that has built-in controls and reporting.?

Ease of use:

Some payment companies have easy-to-use apps allowing you to control payment approvals from your phone. Thus, you’ll always have control at your fingertips.? ?

Who likes signing checks? Ugh! I worked for a company with more than 100 locations, and each month, the owner signed more than 100 rent checks in addition to all the other checks. The owner was often unavailable for check signing, so payments were delayed, waiting for signatures and incurring late fees.

It was also another security issue, printing checks and having them sit for days awaiting signatures. Checks were often canceled or changed; the AP department wasted hundreds of hours canceling and re-printing checks. ?

Turn paying bills into cash:

Virtual cards typically have cash-back features. Due to their added security features, some virtual card companies pay higher cash-back rates than credit or debit cards. ?Checks are expensive.? You buy the check stock, postage, bank processing, and costs for added safety features like positive pay.? Electronic payments can save you money and earn cash back.? ?

What are the best types of electronic payments for businesses?

Virtual cards through a top-notch payment company are the best. They are similar to debit or credit cards but better.

Virtual cards exist entirely online and do not have a physical form. ?Each virtual card has a unique 16-digit number, separate from your physical card number. ?They offer added security for online transactions by keeping your card number private. Virtual cards can be designed for single-use transactions, which limits exposure if the card details are compromised. You can set spending limits, expiration dates, and specific merchant usage.?

More Secure:

If you use a payment company, they set up your vendors and payment logistics. You’re only responsible for approving the vendor, payment amount, and date. The payment company is accountable for transaction security and takes it very seriously.? ??

More Cash Back:

Checks do not offer cash-back features. Many banks charge high fees for processing checks, image storage, and “safety features” like positive pay. Add in postage and envelopes and the time required to stuff and mail; sending a check is expensive when the alternative pays you back. Imagine cutting your purchasing costs by 2%—3% and eliminating bank fees. The savings can quickly add up.

Integrated Accounting:

Some payment companies have easy-to-use platforms you can manage from your phone. These platforms typically integrate with your accounting software and can automate your accounting and administrative processes. Thus, your accountants can spend more time on value-added activities rather than manually entering check data. The entire review and approval workflows can often be automated for superior control and efficiency.

Conclusion:?

That’s my take on checks vs. electronic payments. I hope it helps convince you to switch to modern bill payments.? ?

I don’t work for a payments company and don't receive compensation from any. I have evaluated many, and I do have a favorite. If you message me, I’ll let you know who has my endorsement.