By the time a vendor should be receiving the payment, a significant amount of time has already passed. Delivery of paper checks by mail heightens this risk significantly, as checks can get lost or stolen in transit and wait times for payment receipt average 5 to 7 days. Check fraud accounts for 60% of attempted theft aimed at deposit accounts, according to a 2019 report by the American Bankers Association-with counterfeit checks and forged signatures being the leading types of nefarious activity. There’s increased potential for fraud.High processing costs are just one problem with paper checks, and are a few more: That’s great to hear because an estimated 40% of all B2B payments are still made by paper check. A 2022 Payments Cost Benchmarking Survey from the Association for Financial Professionals (AFP) found that 73% of organizations have plans to transition their B2B payments from checks to electronic payments over the next year. Now that’s pricey!įortunately, many financial executives today plan to move away from paper checks soon. Believe it or not, in 2016 the Bank of America was reporting that the overall cost of issuing a check ranged from $4 to $20 per transaction. So how much does it cost to process a paper check? Statistics vary, but $3 to $6 per check is a commonly reported average, and that range doesn’t even consider the additional inputs involved, such as materials, postage, and employee salaries. And keep in mind … when your accounting staff is stuck performing a myriad of manual functions, they’ve got less time for things like financial reporting, spend forecasting, and budget maintenance. Invoice processing (from presentment to posting) is difficult enough, let alone having to deal with all the steps and sign offs required with cutting checks. There’s nothing inherently “wrong” with paper checks, but processing paper checks these days is much more inefficient and costly than decades ago when there wasn’t any other way to pay vendors. Sound familiar? Or is your dealership past that era? Unfortunately, payments didn’t always make it on time, and businesses missed out on valuable cash rebates-not to mention-there were paper stacks the size of dinosaurs left roaming around employees’ desks. In the Stone Age of accounts payable processing, vendors waited for checks (and waited for checks) while hurried accounting staff on the other side of the transactions rushed around doing manual tasks like matching POs with invoices, getting approvals, and stuffing paper checks into envelopes just before the afternoon mail pickup. It’s time for your auto dealership’s AP department to go from Stone Age to the Digital Age with electronic payments! They’re cheaper and more secure than checks, plus your vendors will get paid faster.
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