Business owners who resolved to wean off paper check processing this year might bounce that resolution off their list, if only because paper check processing is still incredibly popular among U.S. businesses and vendors.
According to a survey by the Association for Financial Professionals released in September, U.S. businesses pay about half of their bills by check. This number is down from 74 percent eight years ago, but the decline rate has recently stalled.
Businesses are sticking to their paper.
A tried and true method
Businesses aren’t just sticking to paper payment processing systems because they’re stubborn; they’re sticking to them because they’re tried and true. Paper check processing has its upsides. Business administrators are familiar with it, it’s comfortable and it’s reliable, thanks in part to the efficiency of the U.S. postal system and a centralized, Federal check-clearing system, which allows for easy, efficient movement of money across thousands of banks. Checks also contain more information than a standard e-payment format. The additional information on checks makes processing easier for businesses that need to match payments and invoices and other necessary information.
That said, paper check processing isn’t without its downsides: costs to businesses can range anywhere from $4 to $20, when considering the price of the check, shipping and processing—writing, mailing, collecting, etc. It’s also reportedly a strain on the economy. According to a Wall Street Journal article last year, issuing and depositing checks costs U.S. businesses between $26 and $54 billion in 2010.
Mitigating the downsides with BPO solutions
The costs associated with these downsides can be mitigated, however, with the proper business processing outsource partner. BancTec, an industry-leading business process outsourcing company, has designed, built, implemented and optimized these payment processing systems for more than three decades. Specifically, proprietary optical character recognition technology increases read accuracy rates for paper checks, minimizes exceptions and results in fewer bad checks. This increase in speed, accuracy and reliability allows for earlier fraud detection, which reduces costs. This processing also ensures funds are more readily available.
In addition, BancTec systems allow reports and data delivery to be accessed via the Internet, EDI or CD. Its archive tools provide easy access by utilizing existing networks and the web. Users have the ability to cross reference with cash letter reports and balancing items as well as support for alternative capture systems.
Until a comprehensive e-payment system is in place, businesses will continue to rely on paper checks to pay their bills and transfer money. That doesn’t mean businesses need to wait to save money on that processing, though. A business process outsourcing company can provide all the necessary software and hardware companies need for quick, efficient and cost-saving check processing with access to online archiving tools for post-payment management.