The advantages of using checks in a small business

Small businesses are flourishing in the U.S. In 2022, the SBA or the Small Business Profiles revealed that there were 33.2 million small businesses in the United States.

However, launching a small business comes with a series of challenges and issues to solve. One of them is how to pay employees and how to receive funds from clients.

Some companies rely solely on credit cards and bank transfers. Some argue that checks are the way to go, particularly secure checks.

This article will explore some of the advantages of using checks in a small business structure and how it can benefit small business owners.

Why use checks?

There are a number of reasons why using checks could be beneficial for smaller businesses. Here are some of the most common ones.

  1. Security options

Nowadays, small businesses can use secure checks to lower their vulnerability to fraud schemes.

Smaller businesses are more exposed and vulnerable to fraud which is why owners prefer to use fraud protection tools and resources to avoid being the victim of fraud.

By choosing secure checks as a payment option, owners can help protect themselves and their clients from credit card theft and fraud. Their clients’ credit card details will not be easily revealed via check payments, whereas they tend to be more accessible with online payments.

  1. To offer their clientele more payment options

By choosing to accept checks, a company offers more payment options to its clients. This is particularly important if the company’s clients are seniors who tend to use their checkbook more regularly than younger clients.

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Offering more payment options can help boost a business’ sales and help its client base grow and expand.

  1. Cheaper processing fees

Some credit and debit card merchants charge transaction fees which can impact a small business. Bigger businesses do not worry about this as much as they have enough financial stability to afford this.

The transaction fee charged for business checks can vary from country to country but is generally low. Most of the time, it is lower than the fees that credit and debit card merchants charge.

However, smaller businesses tend to be financially fragile which is why they will find cheaper processing fees on transactions more interesting and beneficial than bigger businesses would.

  1. Easy process handled by the business’ bank

A big advantage to using checks instead of accepting electronic payments for smaller businesses is the easy process of cashing in a check.

This is particularly useful for smaller businesses that do not have a payroll department or the means to process electronic or online payments. It is worth noting that accepting electronic/online payments usually requires a company to invest in expensive facilities and equipment.

They have to make sure that these online payments are secure and fraud-proof. They then have to process these payments and keep a record of where the funds went.

This can be very costly and time-consuming for smaller businesses with limited employees.

A simple alternative is relying on checks. With checks, company owners and employees do not have to worry about the entire process.

The bank handles and processes the check usually for free.

  1. Slower transfers which actually help small businesses control their finances
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Checks are slower than instant electronic payments and transfers. However, this can be very beneficial for small businesses who have few employees and a very small, sometimes inexistant, payroll department.

It gives these companies time to check every payment, reject any suspicious check or correct any issues such as a duplicate payment. It also gives them a chance to stay on top of their finances by giving them more time to collect the necessary funds before a check is cashed in.

Bigger companies will consider the slower transfers to be a con, but for smaller businesses this could be a considerable advantage.

Final thoughts

This article presented some of the reasons why smaller businesses should consider using checks instead of accepting only online and electronic payments.



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