The time-honored way of paying business bills and receiving payments is via paper checks, either written by hand or printed by your laser or inkjet printer. After all, it is free, right? And it is much safer than paying online, right? I say a big fat NO to both of those questions. Let’s take them one at a time.
First, let’s look at the cost of paper checks. When I talk about this, most go right to the cost of purchasing and printing the checks. While this is not cheap, especially if you get checks with good security features to protect your business, it is not the biggest cost. There is a much bigger cost to paper checks that makes them the most costly way to pay and receive payment. There is a lot of labor involved, and labor is expensive. The checks for payment have to be written or entered and printed, then they have to be signed, placed in envelopes, stamped, and mailed. Received checks have to be retrieved from the mail or often the post office box, opened, stamped or signed, and then taken to the bank (or deposited electronically). All of this is not only very expensive, but also makes this the slowest way to pay and be paid. Estimates range from $4 to $26 per check on both the sending and receiving end as the cost. The consensus seems to be $10 per check to send or receive one. And I can hear you sole proprietors saying, “But I don’t pay anyone else to process them so I have no labor costs.” How much is your time worth? Wouldn’t your time be better spent on other areas of your business? Electronic payments are much cheaper, mostly because of the much smaller labor costs.
Now let’s look at the security of paper checks. They are imprinted with your bank account number and routing number. That means anyone who has access to the checks has that info which they can potentially use to take your money. This includes anyone who finds your checkbook left lying around or lost, as well as all employees on your end and on the receiving end who process it, as well as those who steal mail or receive mis-delivered mail. This kind of theft happens every day, but in small chunks, so you don’t hear about it on the news. This is a much bigger problem than hacking of banks, which we hear about all the time. See my other blogs about how to protect yourself online, but the bottom line is that you need to be much more worried about your local security and the safety of your paper checks than your bank’s online security by a factor of about 100. Probably more, actually.
So I assert that paper checks are the single most expensive way to pay your bills. Credit cards are the safest way, but there are also many good solutions to pay your bills safely and electronically online. Please seek out a better way, with the help of your bookkeeper and or accountant.