Editor’s note: This article is part of a series of blog posts to help you put ACH to work in your organization. The previous post was, “Unlike Algebra, Businesses Need to Know About ACH Payments.”
Remember the “Jetsons” cartoon when George Jetson took his dog Astro out for a walk on the space treadmill? Yikes! He got sucked up into a never-ending, out-of-control spin cycle, screaming, “Jane, stop this crazy thing!”
Similarly, many businesses are stuck on the check-writing treadmill, and the spin cycle is cranking out an unfathomable 20 million commercial checks each day. Businesses, stop this crazy check thing! Here are five reasons why it’s crazy for businesses to write checks:
Here are five reasons why it’s crazy for businesses to write checks:
- Fraudsters love checks more than any other payment type. There is a lot of information printed on checks, and businesses write a lot of checks, so checks are an easy target for forgery and theft. Checks continue to be the primary target of payment fraud, according to the Association of Financial Professionals, citing that 81% of respondents to their latest Payments Fraud survey reported being targeted—or experiencing—actual check fraud attempts. (Spoiler alert—ACH payments have the lowest fraud rate.)
- If you experience check fraud or make a mistake (like pay an incorrect payee or amount) on a check payment, say “bye-bye” to your funds if that check gets cashed; you have no administrative recourse to reclaim funds. (Spoiler alert—you have protections against unauthorized ACH withdraws to your bank account and there are opportunities to get your money back in the event you make an incorrect ACH payment.)
- Checks cost your company more than any other payment type by far but check printers never send a “thank you” note for funding them and paying more than you need to. (Spoiler alert—ACH is a much lower payment cost option.)
- Have you ever had to make a rush or an emergency payment? Delivering that check by expedited service or courier costs a good chunk of change, and expedited delivery services don’t send “thank you” notes either! (Spoiler alert—you can make a rush payment today using Same Day ACH, and, at a fraction of the cost of expedited delivery services.)
- Managing cash flow is a critical function, but in today’s low interest environment, and with the option for check receivers to image checks for quicker settlement, there is really is no float benefit, like in the good old days. And, wouldn’t you like to know precisely when that check will clear to help manage your cash position? (Spoiler alert—ACH payments give better insight into cash flow, providing precise payment settlement times.)
- Bonus reason why it’s crazy for businesses to write checks: COVID-19 protocols mean that many businesses are working remotely and issuing checks has been even more difficult. In Nacha’s 2020 Industry Survey, businesses resorted to creative check issuing, like “drive-by” check approvals to maintain proper distancing. Another business had to shut down the office after a technician serviced a malfunctioning check printer because the tech later discovered he had COVID-19. (Spoiler alert—businesses with established ACH payment programs have fared much better during the pandemic.)
As the hints suggest, ACH payments provide clear benefits compared to check payments. If your company currently does not send ACH payments to vendors/suppliers, you can contact your bank for recommendations on how to get started with sending ACH payments.
Or, you can allow your trusted vendor/supplier to pull the funds from your account, where you don’t have to do anything except provide the company routing and account number. Consumers are very familiar with the various names companies call this option (e.g., Direct Payment, Auto Pay, Simple Pay, Easy Pay, Sure Pay, Recurring Debit, etc.).
Now, I hear from a lot of B2B accounts payable types, who say that’s fine for consumers, but their companies are uncomfortable with allowing the company bank accounts to be debited for invoice payments. But that’s what a check does! And checks are crazy (see above).
Nacha Consulting is offering a free, 15-minute phone consultation to discuss your issues and evaluate options. Complete this form if you would like to connect with the Nacha Consulting team to discuss your organization’s ACH risk issues, Rules compliance, best practices or other concerns.
Nacha has numerous resources to help businesses better understand the benefits and best practices for ACH payments:
- ACH in the Community – Learn the benefits of ACH for businesses, nonprofits and religious organizations.
- Quick Start Guide – A tool for your business to learn how to pay or get paid electronically using ACH.