Most companies across Canada still rely on cheque payments for Salary and B2B payments, but seriously, how do we react when stuck behind someone paying for their groceries by cheque in the supermarket? Let’s be honest – getting stuck behind that one person using a paper cheque in stores is an absolute pain. We stand there wondering how they could possibly find it convenient to carry around their chequebook and pay for stuff with it these days instead of just using a debit or credit card like the rest of the modern world!
Electronic payments are obviously mainstream in the world of consumer purchases and for paying regular bills, in fact, a recent GoBanking survey revealed that 38% of North Americans NEVER write a paper cheque now. The majority of those that do write paper cheques only do so a few times a year or at most once a month. Why then have so many companies still stuck to their cheque books and cheque runs?
In B2B payments & Salary payments many businesses still use paper cheques even though setting up an electronic payment system could benefit their business in many ways.
Not only are there cost-saving reasons for switching to an electronic payment system, like cutting down on cheque-processing costs, handling and postage, but it’s safer as well. In these times where Fraud could almost be considered mainstream, here are a few reasons why paper cheques are not as safe as we may think for B2B & salary payments.
The Bank account number, business name, and routing number are all a potential fraudster needs to access the money in a business chequing account. A valid cheque will also include the signatures of authorized owners/personnel – all this essential information for fraudsters is conveniently located on the front of business cheques, leaving the company open to fraud.
Unlike a business credit card, which usually comes with fraud protection and is “money yet to be paid”, if a company falls prey to fraudsters taking funds from the bank account, an unauthorized withdrawal is real money deducted from the business chequing account balance. While any potential Bank issues caused by fraud are a problem, this could actually cause a business to fall short of necessary funds required to pay immediate financial obligations like employee salaries or suppliers, causing a rapid and real threat to the Company operation.
From administrative personnel, to the post office system, and finally to suppliers or staff, paper cheques are physically touched by many people before reaching their destination. And even when the destination is reached, this doesn’t mean it’s safe.
Even if everything possible is done to safeguard company cheques while in the business itself, cheque fraud can also occur at a supplier’s location. Cheques may be handled by any number of staff at the recipient’s end and could sit on top of desks for days before being cashed. In addition, cheque information will be stored in file cabinets for years, leaving them vulnerable.
As we all know, cheques can be easily duplicated with today’s technology. Armed with complete banking information, scammers can easily replicate cheques and make them look like the real thing. If a scammer has account and routing numbers, they can easily use just that to make purchases.
This boils down to one important point—the security features on traditional paper cheques developed decades ago are becoming ineffectual in today’s electronic world.
These days, a scammer doesn’t even need to replicate or alter a paper cheque in order to steal funds. Authentication, in the form of signatures and cheque security features that businesses relied upon are becoming obsolete in today’s online world. Even if a scammer can easily duplicate and design a realistic-looking paper cheque with forged signatures to defraud a Company, they don’t need to in order to access Company money.
Business owners that have been writing paper cheques for decades don’t usually realize that cheques are not as safe as they used to be. They also often think that switching to an electronic payment system is costly or time-consuming. With the right technology, this couldn’t be further from the truth.
There are AP Automation solutions available that work with most popular accounting software and automate the entire payment process. However, this doesn’t mean any lack of control over payment dates. In fact, it’s just as easy to select the pay dates for each invoice or pay cheque as it is with a paper cheque – probably easier. In addition, the preferred electronic payment method can be securely saved so that there’s no repetition inputting this data for every vendor payment, saving time and money.
Not only will time and money be saved from cheque processing by implementing AP Automation and ACH Payments, this will help prevent fraud associated with paper cheques as well.
There are many reasons for both businesses and consumers to use direct deposit including:
We can help you get the right information to make the best choice for your payroll and B2B payments for your Small Business in White Rock, Langley or Surrey, BC. Here at Green Quarter Consulting - Accounting and Bookkeeping Services for Small Businesses in White Rock South Surrey, Langley and Surrey BC, we navigate Small Business Owners with analyzing transactions, sources of income and your tax risks and how they relate to your business strategy.