Why This Outdated-Faculty Cost Technique Nonetheless Dominates Small Enterprise

It might appear exhausting to imagine, however in 2026, most small enterprise house owners nonetheless use paper checks.

The analysis exhibits this. In line with a 2024 research from the Atlanta Federal Reserve, as a lot as 83% of small corporations — these with as much as $10 million in annual revenues — use paper checks. One other research by an out of doors cost processing agency discovered related (75%) outcomes. And Mineral Tree, a worldwide funds processing firm, stated that in simply the previous 12 months, 57% of companies paid greater than one-quarter of their distributors through examine.

My very own expertise corroborates this. I go to and discuss to numerous small enterprise house owners yearly. And whereas many depend on digital cost for sure distributors, most are nonetheless doing their examine runs the way in which they’ve been doing them for years — even many years.  You’d suppose that, as youthful generations take over, issues would change? Nope.

How can so many enterprise house owners nonetheless be utilizing paper checks on this modern-day?  Is that this ignorance? No, only a good enterprise observe.

It’s not exhausting to grasp. There are apparent causes to stay with paper checks. For instance, there are each the preliminary and longer-term service prices, in addition to the short-term disruption of shifting to an all-electronic cost system in comparison with the return-on-investment for not doing so. Many enterprise house owners don’t have the interior assets to implement such a undertaking. Others don’t need to rock the boat with their suppliers. After which there’s easy demographics: the vast majority of small companies are run by older enterprise house owners — these over the age of fifty — that aren’t solely set of their methods however not anxious to show issues the other way up to repair one thing that for them isn’t actually damaged.

However pretty much as good as these causes are, there are even higher the reason why so many small enterprise house owners are sticking with paper checks.

It’s truly higher safety

Though the Atlanta Fed’s research stated that utilizing paper checks comes with a extra important threat and incidence of fraud, I’ve discovered that these dangers will be simply mitigated, and actually are mitigated by a few of my smarter, extra financially-aware shoppers.

An excellent system of inside controls ensures that each one checks are locked in a secure and solely launched from custody when a examine run is made. Even then, good monetary managers maintain a strict watch on their examine numbers.

Checks then undergo a strategy of approval — manually matched to invoices after which topic to 2 signatures for disbursements over a certain quantity. All of because of this by the point a examine is lastly put within the mail, it’s been in comparison with supply paperwork, reviewed, signed and verified by a number of individuals in a company, guaranteeing there have been quite a few units of eyes laid on the transaction.

Doing so slows down the disbursement course of and provides individuals time to consider a transaction earlier than the cash goes out the door. My shoppers who pay electronically oftentimes arrange their system with fewer of those processes in place, leaving them uncovered to incorrect funds.

What about fraud? That is simply defended by a well-liked service that’s bought by most banks referred to as Optimistic Pay. That is the place an organization submits a listing of funds (together with examine numbers, payee, quantity and date) to the financial institution prematurely, and the financial institution solely disburses cash when the examine offered matches that checklist. Most bankers I do know inform me this service works simply as properly — if not higher — with guide checks offered vs. digital funds submitted that may be topic to potential malware or hackers.

And talking of malware and hackers, firms which are absolutely reliant on digital funds proceed to be uncovered to knowledge breaches and hacks. Digital cost methods (ACH, wires, on-line banking) are main targets for fraud, and plenty of assaults bypass the financial institution completely by exploiting individuals and processes. A 2025 funds fraud research from the Affiliation of Monetary Professionals Funds Fraud reported that 79% of organizations skilled precise or tried funds fraud in 2024. A current FBI report discovered that digital funds are central to losses for each enterprise house owners and banks, with cyber-enabled fraud accounting for 83% of all reported monetary losses and wire and ACH funds being key channels in profitable fraud instances.

The place paper checks actually win

All of those are good the reason why an organization might need to persist with a guide examine processing course of. However it’s not the primary motive why I see this so typically in my shoppers. That motive is easy: higher money administration. Or ought to I say higher float administration?

That’s as a result of if you submit a cost to a financial institution, your cash is straight away gone out of your account, even when it nonetheless takes a number of days for it to reach on the provider. The financial institution is making its cash, however firms miss out on these additional days of curiosity, which, relying on how a lot money you’ve, could possibly be important.

There’s additionally the management issue.  Quite a lot of enterprise house owners I do know like to chop checks and put them in a drawer. The cash is out of their account so far as their books are involved. However it hasn’t left the financial institution but, which could possibly be essential for firms going through money circulation challenges or in the event that they’re in the midst of a dispute. As soon as a examine is put within the mail, there are nonetheless a number of enterprise days earlier than it reaches the provider after which will get cashed. All of those additional days give the enterprise proprietor the flexibility to increase their money circulation just a bit bit, with out incurring curiosity prices or having to lean on different sources of financing.

All of those causes clarify why so many enterprise house owners are nonetheless doing their examine runs the old-school approach: utilizing paper. It might go towards widespread conference. However they’re not improper.

It might appear exhausting to imagine, however in 2026, most small enterprise house owners nonetheless use paper checks.

The analysis exhibits this. In line with a 2024 research from the Atlanta Federal Reserve, as a lot as 83% of small corporations — these with as much as $10 million in annual revenues — use paper checks. One other research by an out of doors cost processing agency discovered related (75%) outcomes. And Mineral Tree, a worldwide funds processing firm, stated that in simply the previous 12 months, 57% of companies paid greater than one-quarter of their distributors through examine.

My very own expertise corroborates this. I go to and discuss to numerous small enterprise house owners yearly. And whereas many depend on digital cost for sure distributors, most are nonetheless doing their examine runs the way in which they’ve been doing them for years — even many years.  You’d suppose that, as youthful generations take over, issues would change? Nope.