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Are Paper Checks Costing Your Business Time and Money?

paper checks

Ditching paper checks is not only a matter of curbing costly monetary fees, but also saves time and resources. Here's what you need to know.

With Federal Reserve studies showing a precipitous drop in paper check use from 42.6 billion transactions in 2000 to only 14.5 billion in 2018, it’s no surprise that there may be a coming generation that frowns at the mention of a paper check. An even more universally understood indicator: as paper checks become less common, Google has seen a dramatic increase in ‘how to write a paper check’ searches. Once a staple of commerce, paper is on its way out!

And yet, considering the public’s shift away from paper checks, one has to ask why businesses still hinge operations on paper checks. After all, every single check printed costs a business—which adds up quickly. Not to mention the labor costs, opportunities for error, and the environmental impact! One would think businesses would be clamoring for a better option.

Despite this, paper checks remain in use due to inertia, and their universal nature.

Paper checks leave a tangible paper trail, offering transparency, standardization, and methodical organization. Some businesses also hold onto the paper check system for payroll purposes and well-established accounting software. Changing up a payroll system may require some adjustment time and present a massive learning curve. However, companies that are hesitant to fully digitize their transactions are feeling the costs, and more than just financially.

As opposed to the cumbersome nature of paper, you can make online payments anywhere, at any time. Online payments are cheap and fast to administer. Automatic payments also reduce human error and intentional interference, decreasing the risk of fraud. Digital options integrate enhanced security measures, making them safer and allowing employees or vendors to receive payments near immediately.

Doing away with paper checks is not only a matter of saving on costly monetary fees, it will also save your business time and resources as well.

Paper Checks Are Not Cheap

Shockingly, Bank of America's estimated lowest average processing cost is $6 per paper check.

Similarly, the estimated cost for businesses mailing 500 checks is estimated at $235 on postage alone. Beyond the check paper, stamps, envelopes, and printing costs, one also needs to consider processing fees. Sorting, approval, bank reconciliation, maintenance fees, administration, stop payment fees, bouncer sheets fees, treasury management charges—these all cost businesses, per check. Adding up all these little expenses, these numbers suggest that companies processing up to 10,000 checks a month could easily be losing well over $1 million annually—just to sustain an outdated payment method!

Since paper checks are typically destroyed within 90 days of acceptance, they also have an incredible impact on the cycle of waste this type of business system creates. Trees, water, gases, and increasing landfills are a few of the many concerns when it comes to our fragile ecosystem.

More Than Just The Cost of Postage

Time is money, and as such, wasted time and labor spent writing and processing physical checks drains your profits. Paper check processing and labor requirements run exorbitantly higher than digital processing. And yet, many businesses stick with it because they can’t conceive of another way to preserve that all-important paper trail.

However, ditching paper checks does not mean you have to abandon payment tracking when it comes to payroll.

NatPay’s Doculivery solution offers a high-tech alternative to time-consuming and outdated storage and retrieval systems, collating and sorting payments automatically.

This means no searching endlessly through file cabinets to find what you want or worrying about misplaced documents. You can access what you need at the click of a button, thereby reducing storage costs, stationery costs, and precious time.

Online documents are accessible from anywhere, so working from a location other than the office is not a limiting factor. Electronic documents such as e-statements, bills, online W-2s, 1099 forms, and online click-to-pay forms are created and delivered in less time and at a much lower cost.

Other valuable features include automated fillable forms and report creation, secure storage, instant search functionality, and immediate access to annual tax and payroll documents for legal, audit, and regulatory purposes.

Fraudulent Paper Checks Could Result in Significant Losses

Paper checks are ripe for fraud and identity theft risks.

The American Bankers Association 2019 Deposit Account Fraud Survey determined that paper check fraud accounted for a whopping 47% of industry fraud losses in 2018! With vulnerability increasing alongside the number of times a paper check is handled, paper payments don’t offer a lot of security.

paper check cost the environment
Source: Shutterstock

NatPay’s Direct Deposit solution cuts out handling delays, offering a secure payroll process. NatPay also keeps documents safe utilizing SQL server redundancy, GeoTrust certificates, SSL encryption, and firewall protection to curtail exposure and avoid critical data loss.

Additionally, the Direct Deposit solution from NatPay includes a range of payment methods, including electronic pay stubs and employee payroll pay cards. These dynamic options drastically increase efficiency and employee engagement while taking an ax to administration and labor costs.

Environmental Impact of Using Checks

In the past 40 years, global paper use has increased by 400%, with the U.S. displaying the highest paper use—700 pounds of paper per person annually! It is no surprise then that the U.S. is also one of the world’s top three largest paper manufacturers.

Considering one needs 10 liters of water to produce a single A4 sheet, every bit of paper saved counts. Paper production also significantly contributes to deforestation and amasses 26% of landfills.

While saving the world is a group effort, slashing your paper usage can contribute mightily to the future of the planet.

Doculivery from NatPay can help your business make a seamless transition that won’t only benefit your bottom line but will benefit the Earth as well.

NatPay: The Alternative to Paper Checks

There is no need to keep answering questions like “When will paper checks be mailed?” or scrambling because an employee was out sick on check delivery day.

With greater security, increased efficiency, reduced payment delays, improved tracking, accurate and immediate financial reports, and significant savings, NatPay's Payroll Direct Deposit solution can support your business payroll across the board.

Reach out to a representative to find out more and see how your business can start saving today.

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