Paper Checks Mean Trouble For Small Businesses

Paper checks can be a valuable part of every person’s life.

Not only can such instruments move large amounts of cash safely from one place to another, allowing for big-ticket purchases without the risk of carrying bills, but such are often vital for the simple act of paying bills.

SMBs, however, may want to consider other options as much as possible, as a new study from Patriot Software notes that paper checks can be big trouble for business.

While paper checks coming into a business can be a problem—nonsufficient balance fees, bounced checks, that sort of thing—the paper checks going out can likewise be an issue.

Since over half of small businesses handle their own payroll functions, the idea that paper checks would be a big part of that isn’t surprising to Patriot’s Nick Harvey.

Patriot went on to offer up a whitepaper featuring 10 common mistakes small businesses made in going to payroll, including improperly classifying workers, missing tax deadlines, and several others.

Handwritten checks provide some deniability when it comes to slower-paying businesses; it’s easy to give the old “the check is in the mail” excuse, and it’s hard to deny it, so this can buy some time for a beleaguered business waiting for an account receivable to finally put its own check in the mail so other bills can be paid.

Though direct deposit options are becoming more prevalent, there are still plenty of businesses using a non-mobile method of making payroll. That lag can be helpful for small business, but it’s a false savings, Harvey notes, as there are plenty of other potential problems afoot.

Given the growing prevalence of mobile payments methods, it is surprising that so many businesses still turn to paper checks.

The mail lag, the negative image, potential tax and regulatory issues and others add up to be a real problem.

Those looking to make the jump to more electronic means have several options available, and can not only remove paper checks from coming into a business, but also from going out. From Square to PayPal and beyond, businesses have plenty more options, and signing checks no longer need be a part of everyday business.