No Paper Checks, No Problem
Here’s a bit of irony for you:
A staggering 81% of businesses still issue physical checks to pay other commercial entities, citing security as their #1 reason for sticking with paper. But, paper checks are quite literally a false sense of security because they fall victim to fraud at a much higher rate than electronic payments. In fact, the Association for Financial Professionals’ 2024 AFP Payments Fraud and Control Survey found that:
- Checks are the payment method most vulnerable to fraud, with 65% of respondents reporting their organizations faced attacks of this type.
- Fraud due to interference with the United States Postal Service (USPS) was up 10 whole percentage points from 2022 to 2023—with 20% of respondents having experienced it.
With built-in security measures, such as encryption codes, authentication, and payment gateways, electronic payment methods like wire transfers, ACH payments, and credit card payments are more reliable than checks. But, here’s the best news of all: they are also way more efficient.
Yes, moving away from paper check payments mitigates your risks. But, it also streamlines your operations and reduces your costs—by slashing the time it takes to collect payment for a sale (your days sales outstanding (DSO.)) Finally, and perhaps most importantly, when you eliminate physical checks, you also accelerate the order-to-cash cycle—which equals money in your bank.
Bank of America estimates that a B2B paper check costs the payee anywhere between $4 and $20 each. The primary culprit is the deposit delay—a literal protracted lag between invoice and liquidity. When you start with paper, you are looking at nearly 30 business days for a complete process:
Milestone | Explained | Best-case timeframe |
Issuance | Your customer receives and processes your invoice, then issues and executes your check. | 10 business days |
Delivery | Your customer sends you the check—most often via US mail. It hits your physical mailbox, PO box, or bank lockbox and the check and/or remittance info are routed to your AR Department. | 10 business days |
Deposit | When you finally receive your check, someone (your bank or AR team) moves/deposits it into your bank account. | 3 business days |
Clearing | Your bank requests the funds transfer from your customer’s bank. | 2 business days |
Settlement | Funds are moved from your customer’s account to your account. | 2 business days |
Cash application | Your AR team matches the payment to the appropriate invoice and applies it back to your ERP software. | 2 business days |
DSO | 29 business days |
By offering flexible electronic payment options and providing education around those alternatives, you can help your customers confidently and comfortably switch to a digital-first payment mindset. Moreover, you can significantly diminish—or altogether eliminate—your reliance on paper-based payments. In doing so, you’ll make your AR payments more secure and efficient. And, you can build and maintain a strong cashflow position by shaving weeks off your DSO.
We’re here to help you get there, strategically targeting your check-paying customers once you are up and running with Quadient AR via:
- Automated communications that contain invitations to move to digital payments
- Personalized talking points docs that effectively outline the benefits to your customers
- “Pay now” buttons for all your invoices, enabling your payers to quickly and easily submit payments via the Quadient AR integrated payment portal.
Quadient is not a payment processor, but we have several partners to choose from in providing the best payment methods for your business and clients via our portal, which processed US$1.12B in payments and nearly 296,000 individual transactions in 2023.
For example, CallRevu, an automotive company that provides phone process measurement services for car dealerships, doubled its customer base via an acquisition and their AR department felt a very specific squeeze. They were already struggling to manage their physical check volume with heavily manual processes. But the industry was still dominated by paper payments, so 2x more customers meant 2x more checks.
CallRevu adopted Quadient AR, taking advantage of the Quadient AR Digital Optimization Program to help onboard customers with digital payments. With the program’s communication cadence and other facilitation features, the company saw quick and significant benefits:
- 50% less paper checks
- Average DSO reduced by 9 days
- Total elimination of manual check processing
These outcomes are not unusual. On average, the program is helping our customers reduce inbound check volume by 42% and check dollar volume by 68%--all in as little as 3 months—and with huge impact to cashflow. And, that’s on top of the improved customer experience and decreased risk of fraud.
Take a look at your realistic DSO with electronic payments:
Milestone | Explained | Best-case timeframe |
Issuance | Your customer receives and processes your invoice, then hits the “Pay now” button to go to the Quadient AR integrated payment portal to choose from a variety of enabled digital payment options. | 5 business days |
Transfer | Your customer’s bank sends funds to yours. | 2 business days |
Settlement | Funds are moved from your customer’s account to your account. | 2 business days |
Cash application | Your AR team matches the payment to the appropriate invoice and applies it back to your ERP software. | 2 business days |
DSO | 11 business days |
Help your customers break the paper check habit.
Book a demo with us today to see how Quadient AR can help your customers confidently and comfortably switch to electronic payments.
