How Much Are Deposits Costing You?
If you're accepting paper checks, you may be wasting time and money. Find out how you can increase efficiency and optimize cash flow with remote deposit solutions.
The Federal Reserve reports (Opens Overlay) that while there have been changes in payment methods and preferences in recent years, companies still require the ability to receive and process paper checks. But processing and depositing checks is likely costing businesses more than it should. If your organization accepts checks, you should be aware of these hidden costs that are inherent in the check-cashing process.
The Cost of Checks
In receiving paper checks, one of the biggest costs is time. Depositing checks is a manual process, requiring an employee to record payment information and make a trip to the bank. This approach limits productivity: The employee is kept occupied preparing and transporting checks for deposit, and lost productivity is compounded if they must return to the bank or make multiple visits per day. Depositing checks at the branch keeps employees from spending their time on more meaningful and impactful tasks, like following up on overdue accounts.
With paper checks, accounts receivable must record information in several places, correct inconsistencies and use the company's preferred method for filing transaction history. These manual, paper-based processes are prone to error and can add the potential for confusion and lost productivity down the road.
Meanwhile, the invoice cycle for paper checks can take days to process. Open receivables are inaccessible revenue and can have hard costs for companies in terms of cash flow.
Products to Save Time and Money
Fortunately, there are tools available for businesses that can help expedite and improve the receivables processes, rendering check-related costs in time, money and efficiency increasingly unnecessary.
In 2004, the Check Clearing for the 21st Century Act (Opens Overlay) enabled banks to transmit checks with scanned electronic substitutes, removing the need to physically transport paper checks between institutions. Instead, banks can instantaneously transmit scanned copies—which then create new opportunities for companies to optimize their receivables process.
Paper checks will continue to be an important noncash payment method for years to come, and remote deposit solutions can help businesses accept checks while realizing time and cost savings in a modernized, digital process. The savings and efficiency they yield allows employees to stay focused on the hard work of contributing to company growth and innovation—and not wasting time manually depositing checks at the bank.