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Paper Checks Are On the Decline in the B2B Payments Space

October 30, 2018 by Mark Fisher

Making it easy for customers to pay their bills is a key component of any successful company. Because really, if you can’t collect payments, how will your business survive? For many B2B companies, this means accepting paper checks as the predominant method of payment. And once you start, it’s really hard to convince yourself that customers will pay any other way.

Paper check decline

Imagine you’re the controller for a manufacturing company that receives the vast majority of payments via paper check. You strongly believe that customers would not be willing to use any other payment method, even though you yourself have started submitting online payments for your own suppliers.

This mindset, while common, ignores what’s happened to all of us as part of the digital revolution. In our personal lives, we pay our bills through banking apps. We send money to friends through Venmo and PayPal. We get out of an Uber or Lyft and the money is automatically debited from our account. And seriously, we can’t stand it when we have to get out our checkbook. 

The widespread digital transformation has affected all other areas of the enterprise as well. At work, we now save money and time by using ERP, CRM, VOIP, and other cloud/SaaS platforms that have automated much of our previously tedious manual processes. The digital revolution has arrived.

News flash: the digital revolution affects consumers AND businesses.


There’s myriad data to show that the move to digital payments is carrying over to the business world. The Association for Financial Professionals reports that businesses made 80 percent of payments using paper checks to pay bills in 2004, dropping to 51 percent by 2016. Payment options like ACH, credit cards, and ePayables take a bigger chunk of the B2B payments pie each year.

It’s hard to look 10 years into the future and imagine that paper checks will still have a place in business or consumer payments at all. But for many companies, there’s a line between now and then that must be crossed to move to digital payments. And the biggest barrier for many is an imaginary one.

In our experience, customers who have made the switch to PayStand have moved between 50 and 100 percent of their payments to digital methods. And in many cases, these are companies who initially told us their own customer base was “old school”, “not technically savvy”, and “stuck in their ways”.

We get it: finance leaders may feel that they don’t want to complicate things or disrupt their own business. They tell themselves they have to keep accepting paper checks to stay competitive. But there are real costs to sticking with paper checks AND big benefits to moving B2B payments to digital.

Contrary to popular belief, paper checks carry tangible costs.


There’s a long-held belief among the business community that checks are “free”. However, that couldn’t be further from the truth. While credit card fees are readily apparent, the costs of using paper checks for payments can easily be hidden — but are very real.

Consider everything your business has to buy in order to receive payments using paper checks: paper for invoices and envelopes, postage, ink cartridges, and printers, to name a few. Then there’s the cost of employee time spent on the collections process. That’s the really tedious part — opening envelopes, processing checks, following up on unpaid invoices, and manually reconciling payments.

So what’s the actual cost per paper check? Estimates vary widely. Bank of America projects a range of $4 to $20 per B2B check, while the 2015 Electronic Accounts Payable Benchmark Survey by RPMG Research estimates an average of $31 per business check. In those terms, the cost of paper checks is comparable to and sometimes higher than digital methods.

Then there’s the potential for B2B check fraud, which happens to nearly three-quarters of businesses and costs them between 0.5 and 1.5 percent of their total revenue. And all the constant waiting on paper checks in the mail can cost businesses big in terms of cash flow. Having cash in hand earlier using digital payments means faster time-to-cash (TTC), reduced days sales outstanding (DSO), and a whole host of other metrics that project the health of a business.

Paper checks can’t compete with the benefits available with digital payments.


Consider what businesses have to do to make or receive payments every time a check is involved. For receiving checks, it means manually opening each envelope, reviewing payment details, entering each one into your system of record, and depositing them at the bank. For making payments, it’s printing those checks out, grabbing a good chunk of time for your CFO or controller to sign each check, and stuffing them in postage-paid envelopes and popping them in the mail.

But with digital payments, companies can offer their customers options like:

  • Electronic invoice delivery,
  • A “Pay Now” button on each invoice,
  • Payment options directly on their website,
  • Digital payments like ACH, eCheck, or credit card,
  • Payment tokenization with PCI level 1 compliance for fund-on-file transactions,
  • Scheduled or recurring payments based on pre-agreed terms,
  • And, virtual terminals to capture in-person and phone payments.

All these digital options make it a lot easier for customers to make a payment on their terms.

On the back end, it’s a whole lot faster and easier to manage accounts receivable (A/R). A/R specialists can ditch manual processes like entering checks, repeated phone calls to delinquent payers, and sticky-note reminders for recurring payments. Instead, they can focus on exceptions and let automation take care of the rest.

Controllers can let go of reactive tasks and instead use robust reporting to look for ways to incent faster payments. Customer service staff can access online payment history for inbound phone and email inquiries. The possibilities for higher visibility and increased automation abound.

And a big bonus: using digital payments does not cancel out a customer’s ability to pay via paper check. Customers that really are inflexible can stick with paper checks while the majority make the leap to digital.

There’s too much at stake to use just use paper checks for payments.


Modern businesses can’t afford to accept paper checks as the predominant method of payment anymore. The real costs of using checks are too high when compared to the benefits of offering digital payments. And that doesn’t mean you can’t have a few stragglers who still pay by check - they just need to be the exception, not the norm.

Want to learn how to make the leap from paper checks to digital payments with as little friction as possible? Download PayStand’s Guide to Understanding ACH and eCheck to get started.