Are Check's Secure and Can Technology Improve My AP Process

Are Check's Secure and Can Technology Improve My AP Process

Man Signing Check

A couple of weeks ago we meet "Same Way Sal" one of the issue he faced was how to define long-term goals.  We addressed that issue last week. This week we will be addressing the issue of Sal handwriting checks.  Sal is making and keeping track of payments the way he would with his personal expense. Today we won't address the issues with tracking expense with a checkbook ledger for personal expense but we will break down the main issues with it for a business. Here is what will be to cover today.  The security risk of checks. The hidden cost of writing and mailing checks. The cost of missed payments. and practical ways to combat these issues.

The Security Risk Of Checks

Many people are so used to writing checks that it is second nature.  It has and is the way they pay bills. But most people don't think about when you make a payment with a check you are handing the individual all the information they need to empty your bank account.  With the information, I can go online to pay my bills from your bank account or initiate an ACH transfer from your bank to mine. The National Automated Clearing House Association or NACHA, the company which is in charge of processing paper checks is quoted as saying:

"The most effective way for consumers to safeguard bank account numbers is to stop using paper checks. Since money transferred electronically passes through fewer hands than a paper check, electronic payments can be a safer option for consumers."

For more details check out this article from Fusion.

The Hidden Cost of Writing and Mailing Checks

Not only are paper checks a security risk but they also cost more than you may think.  Traditionally we think of the hard cost of checks.

  • Postage per check $0.49

  • Cost per Checks $0.46

  • Cost per Envelopes $20

  • For a total of $1.15 for each check mailed check

But what about the labor involved or the printer and ink. estimates the average cost per check is $10.  They also estimate the annual cost of printing 500 checks a month is $24,540 vs $1,680 going fully electronic.  As you can see if you add in the soft cost (labor and printer ink) the manual process of printing and mailing checks become a lot less appealing.

The Cost of Missed or Late Payments

Manual processes introduce human error. If your process is manual you have lost a bill or forgotten to pay one.  When I worked for a half billion dollar company they paid their vendors late because they had a manual approval process.  What most people don't realize is the cost related to those errors. puts it like this:

"Payment errors are a big part of the accounts payable (AP) process. According to research by the Accounts Payable Network, payment errors affect on average 9 percent of payments."

"Working with paper slows down the AP process so much that it can be a struggle to turn around payments fast enough to avoid late payment fees and interest costs. But paying late can also cost you in terms of your relationships with vendors."

The biggest cost of payment errors and late payments is alluded to by in the last quote. It damages vendor relationships. If your vendors don't get paid on time what motivation do they have to complete their project on time and why would they give your project priority over someone who pays timely.

Practical ways to combat these issues.

To combat the security risk of paper checks use a vendor like who works as an intermediary between you and your vendor. When you setup an account and start sending e-checks they withdrawal funds from your bank account into a holding account for the amount of the checks. So if someone tried to take money from the account on the check it will not be connected to your bank account.

Using a vendor like also takes care of the second issue. Not only will they send checks to vendors for you but they also offer an invite feature where you can have your vendors create a free online account to get paid by ACH instead of a check.

Lastly, using a service like or just your accounting solutions like Xero to track bills whether reoccurring or not can reduce errors and using them to set up an approval process can speed up payment.


Manual processes come with a lot of baggage. To do a proper comparison of costs you have to include soft costs like labor. When you do it becomes clear that technology has made things not only more secure but also more cost effective.  So why don't more businesses implement these solutions? It can be a variety of reasons whether fear of change or not understanding technology. But one thing is clear the businesses who do implement these kinds of solutions will have an edge on their competition.

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