The age of the personal cheque is coming to a close. Once upon a time, every pay cheque had to be cashed in person, inside a bank, during standard business hours. Now, cheques face competition from a range of payment options that make it easier to send, receive and even request money anytime, anywhere. In fact, paying with paper may soon seem as antiquated as sending a telegram.
Through tools such as Interac e-Transfer and other peer-to-peer services, consumers are already adapting to this new reality for personal use. But despite all the advantages that consumers are now realizing from adopting digital payments, such as convenience, access to real-time funds, safety and security, businesses are still reliant on cheques.
More than 54 per cent of businesses believe they are spending too much time on payment processing activities1 While businesses believe cheques to be quicker, and safer, they still rely heavily on cheques to pay for most business expenses, even though they are fraught with challenges. This continued reliance on cheques creates a few big issues:
Cheques Put a Hold on Companies’ Finances
Wait times are a major challenge with cheques. Once someone decides to make a payment using a cheque, they will need to fill it in or print it, get it signed, put it in the mail. Once it’s received, the cheque will need to be deposited – possibly involving a visit to the bank. Based on typical payment terms, it can take up to 60 days to process traditional cheque payments, meaning businesses can wait up to two months to access liquid funds to manage their day-to-day operations.2
This doesn’t even include the time and uncertainties surrounding cheques like chasing customers or suppliers whose cheques may be “lost in the mail” or if there are insufficient funds. These payments may never come through.
Cheques Bring Old Problems to New Technology
Even with a more convenient deposit experience, the inconvenience of cheques persists in other ways. Since the hard copy still exists after the electronic information has been sent, so too does the potential for fraud or customer error. A fraudster could attempt to submit two different copies of the same cheque, while a legitimate user may accidentally try to cash both an electronic version and a hard copy, which makes holding periods a necessity.
The Future of Business Payments
Businesses seek efficiencies for running their business at every opportunity. When it comes to cheques, 67 per cent of small business say they would leave cheques behind if a suitable alternative was available.3 From direct deposits to Interac e-Transfer, alternatives already abound, each offering a variety of benefits compared to paying with paper. Interac e-Transfer, for example, is based on a good-funds model, lower-cost, and is seamlessly integrated with the latest technology.
For a business owner, the ease of immediately requesting, sending and receiving money from anyone in Canada is an integral component of maintaining a strong cash flow and running a successful business. Payments go straight to the account in near real-time, giving immediate access to funds. This allows small business owners to put their money back to work for the business right away.
The good news is solutions like these are on the horizon. For businesses, Interac offers two features through Interac e-Transfer, Autodeposit and Request Money. With Autodeposit, funds are automatically deposited into a user’s bank account using a telephone number or email, without having to answer a security question. This allows ease of access and is especially useful for small businesses who may be receiving multiple Interac e-Transfers at once.
With the Request Money feature, users can go into their online or mobile banking and easily request funds they are owed from a customer or vendor. This eliminates time spent waiting for an invoice to be mailed and a cheque to be mailed back and can enable business owners to put those funds back into their business that much quicker.
While many businesses haven’t been as quick to embrace new digital payment methods, many SMEs are starting to see the efficiency benefits. Once digital options that provide a convenient, cost-effective and secure method of sending, requesting, and receiving multiple payments – as well as managing invoices and reconciling finances – are broadly available, more businesses may finally be ready to cheque out.
1,3 Payments Pules: Small Business Survey Edition, Payments Canada, March 2018
2 Based March 2018 Moneris A Payment Method Worth Buying Into: Four Ways Commercial Payment Cards Benefit Suppliers.