Will Paper Checks Ever Leave B2B?

Posted by: Ashley Choate
B2B businesses are not like other businesses. They operate on different principles, market differently, and cover costs differently. Unlike most of the businesses operating for consumers only, B2B companies seem to be stubbornly stuck on the use of paper checks.

The reasons for this continuing use of paper checks is myriad, but, mostly, it can be summed up with a simple adage: If it ain’t broke, don’t fix it. Many B2B businesses and their respective client companies have just gotten used to doing business a certain way, and if there is no pressing need to invest in electronic payment methods, they prefer to stick to what they know.

In fact, according to 2016 survey on electronic payments, paper check usage by B2B businesses has actually increased by 1 percent since 2013. While that isn’t much, the fact that paper checks persist as a payment method in an increasingly digital world is shocking.

According to the Traxpay Market Research team, 37 percent of payments between businesses occur in paper check format, a number they attribute to a report published by the Ardent Partners in 2015.

Fortunately for the trees, that number isn’t in the majority, and another article published by PTMNT.com in late 2016 indicated that the rise of same-day ACH—the ability to submit and ensure receipt of a payment in the same day—will likely have an impact on check usage numbers. At least, 70 percent the executives surveyed seemed to think it was “very likely” or “somewhat likely” to attract their payment preferences, but there are rarely any guarantees.

Probably the most baffling part about the continued use of paper checks by B2B businesses is that electronic payment methods are both more efficient and cheaper, as well as less fraught with challenges. Several sources have reported ongoing difficulties with paper check usage that B2B companies have either pushed aside or sought to mitigate in other ways. Those difficulties include:

  • Lack of tracking or analytics visibility
  • Longer payment processing times
  • Greater risk of fraud
  • Payment and accounting reconciliation difficulties
  • Difficulty processing rebates

On the other hand, the benefits of electronic payments speak for themselves:

  • Quicker processing, even same-day
  • Easier tracking and comprehensive analytics capabilities
  • Sharing between payment systems and accounting systems for easier reconciliation
  • Lower costs
  • More flexibility in payment types (credit, debit, ACH, etc.)
  • Quicker rebate processing, when needed

While the initial costs to set up electronic payments can be intimidating in some situations, the ultimate savings in time, efficiency, and responsiveness to client needs generally make up for them. B2B businesses may be slow to change, but paper checks will eventually die out, according to nearly every money analyst. The question now is how long B2B companies will draw it out.