I order business checks for clients frequently. I use a company called checks for less, but compares prices and get the cheapest ones you can. Do not waste money on extra security features. They are a gimmick and provide no protection at all. If your bank offers it for free, see if you can get them to write and mail checks for you through their website. PNC does it for free, and the check they mail doesn’t have your account number on it.
Also, to cut down on the checks you are writing, get a company card through your bank, set it up to auto pay through your operating account. Pay it in full every month. You’ll get 30 days of slack in your cashflow, no interest, any reward points will be bonus, and you’ll have a lot of your business expenses on an easily managed statement.
This was true once, like back in the 1980s, but hardly any more.
Almost all banks now use photo scanners that read the printed characters, not depending on MICR magnetic reading. Because these same scanners also use OCR to encode the amount that is written on the check at the same time. So most checks go thru the process without ever been looked at by a human worker at all.
At a company I worked for we had a check reading machine because of the large volume of checks we received. As with everywhere I’ve ever worked as an accountant, the first thing we do when we receive checks is make a copy of them. The reader printed a message in red ink across the front of the check and it couldn’t be read again or deposited. A couple of times, the machine malfunctioned after the check was read and printed across and we lost the batch. With the okay of the Controller, I tried running the copy though the reader and it worked! We completed the batch with no problems.
BTW, by law we’re allowed to keep a copy of the check, but must destroy the original after a certain period of time.
Regarding odd characters and difficulty reading the info on the bottom of a check, only the bank or a store cares about that. If they it can’t be read electronically, they handled and the numbers entered manually. Ever see a cashier try to scan a check at the register and have to manually key it in? I have many times, especially since I keep a folded check in my wallet for years for the odd times where my CC is declined or the place doesn’t take CCs, extremely rare today. The cashier will ask me to write a new one, but has never refused my creased check, even if it means calling a manager over.
Another point about security features of business checks. There probably is some special software to check on on the bank’s end, but you can electronically deposit just about any check with your phone. Personal, business, paycheck. The only restriction I can find is dollar amount: https://www.mybanktracker.com/news/comparing-mobile-check-deposit-limits
From an accounting standpoint, checks for businesses have a major advantage. You have proof who signed it and who deposited it, either a physical copy or online.
Businesses, small and large have different accounting and auditing requirements.
Maybe I’m missing something, but I don’t really understand your statement at all. I don’t see any advantage, let alone a “major advantage” to paying with cheques.
If a vendor accepts an e-payment , I have an electronic record of the date the payment was made and the vendors invoice number is embedded in my payment. This is by far the common way B2B is done in 2020.
As I said in my previous post, I haven’t used a cheque 3 years and our suppliers range from huge multi-nationals to solo handymen. Our accounting and auditing teams have never once mentioned “major” security risks you say exist.
My wife is the head of accounting at a B2B organization and they stopped accepting paper cheques from customers over 10 years ago. Contrary to what you’re saying, the risk associated with paper cheques was massive. They take longer to clear. Customer’s cheques would bounce, resulting in banking fees. If the customer had their goods, her company was left chasing them. Customers could declare bankruptcy in before the cheque cleared. Meanwhile the e-transfer is essentially instant.
Maybe where you’re from is way behind in technology, but certainly in Canada even the smallest companies accept (and prefer) electronic transfers. I have a rental property and I do e-transfers to my grass mowing company and he’s a 2 employee owner-operated business. Even the handyman I use is a solo guy and he prefers e-transfers.
Definitely not true here in the US. As just one example, my son’s piano teacher accepts cash or checks only.
If someone claims they didn’t receive or cash/deposit a check, a business has for free or can receive a copy of the back of the check showing the person’s signature and back account (used to be SS#) or if it’s not your bank, they may require a thumbprint (yes, much harder to use a evidence, but it’s there).
Also, checks allow a float that’s sometimes necessary. Ever pull the “Check’s in the mail!” card. Businesses do it too. Print and date it, run it through the postage machine and mail it later. Yes, the post office sometimes prints a code on the bottom of the envelope showing the time it was processed, but Hey! maybe it got stuck in the mailbag!
Several companies I’ve worked for (yes, I’ve worked for a lot of companies) wouldn’t hand out physical checks until after lunch to allow time to make that day’s deposit after lunch. Once our account was overdrawn because the guy we mailed the check to deposited it electronically, even though it was dated for two days later (payday). Later he asked us to just email a pic of the check before sending it him via Fed-Ex. We refused.
Before anyone says, “Well a good company should always have enough money in the bank to cover expenses.” I’ve talked about how tough it can be for construction companies awaiting payment because of the law that “You don’t get paid until we get paid.” and retention up to 15% which is all the profit. By law, laborers must be paid for their work weekly, while the company may not see a cent for months or final retention payment for years, sometimes never.
As discussed on other threads, accepting CC or ACH payments (less for ACH) results in a fee to the receiving business. On the other hand, some banks allow a limited number check deposits before they start charging a fee per check and sometimes charge for electronic copies of deposited checks. There’s also stop payment fees, overdraft fees and NSF fees. All part of doing business. True, but it may add to the make or break factors in running a business, especially small.
One subcontractor we worked with was also a partner in the company I worked for (yes, it’s common in the construction industry) required us to Square Pay instead of our own CC processor. The fee from Square was 1-1.5% higher. So what you say? When you’re dealing payments in the hundreds of thousands of dollars, it may make the difference between making payroll that week or not. Because I was the one processing the checks, I’ve been asked to hold my paycheck for up a day or up to a week, “forgetting” to deposit it.
Edit: The companies I worked that for were small but not that small, ranging from several million to 15mill a year.
@Suranyi - I’m sure a topic for another thread (if it doesn’t exist already) is why is the US so behind and slow when it comes to adopting new (proven) technologies. Aside from e-banking, I’m sure we could add in things like chip/pin credit cards and many more.
@ Lingyi
So essentially the “major advantage” of cheques vs e-banking is they allow you to conduct illegal cheque kiting if you can’t manage your cash flow.
Point taken.
Chip cards have been standard in the US for a few years now, and just about all major stores use them. More and more small stores do as well.
However individual service providers have been reluctant to use any form of electronic payment for decades, and that is changing only very slowly. I recently wanted to give a Christmas gift to a delivery person, I had no idea how to do it except by giving him a check.
Why business checks are the way they are is mainly for bookkeeping/accounting purposes and for accountability. If you don’t need that you can order the standard checks just with your company name on it and save a lot of money.
His point wasn’t chip; it was chip+PIN. That’s still not common here.
Thanks Balthisar - yes, I was referring to the pin part of the chip + pin cards.
Last summer when I travelled in the USA to my surprise (and consternation) I was still never once asked for my pin, only signature.
When chips started in Canada (7 or 8 years ago?) all businesses almost immediately refused to accept signatures. If the card had a chip you must enter the pin to use it. The increased security protection for individuals and businesses is huge.
I’ve found the same for the last few years traveling through Europe, Asia and Australia.
The USA seems to be the only one so far behind the times (for reasons I don’t really understand).
I’ve use my chip card extensively in Canada with signature, and although not “extensively” in Australia and New Zealand, with no issues. For Australia and New Zealand, the clerks usually acted surprised, “oh, it’s asking for a signature!”, whereas Ontario is full of Michiganders with chip cards and no PIN, and pretty much expects signature requests.
Can you explain this in a bit more detail for us business-illiterates? What does the size and format business checks (as opposed to personal checks) do to help with bookkeeping, accounting, and accountability?
As I mentioned above, I suspect the larger check format is a carryover from older days when check writing machines were more common. https://www.officedepot.com/a/products/516455/MAX-USA-Electronic-Check-Writer-10/. If nothing else, the wider format of the check makes it easier to write/type large numbers. Try writing, Seven Hundred Thousand, Seventy Seven Thousand, Seven Thousand, Seven Hundred, Seventy Seven and 77/100 Dollars on your personal check! 
I already stated some of the reasons businesses pay by check, primarily having proof of payment, receipt and deposit by the payee. And others have mentioned the security measures that can be added.
Business checks can also be three part https://intuitmarket.intuit.com/spvc?track=52397&src=ppcmain&cid=ppc_G__US_.PSG_US_GGL_Shopping_Core-Feed_PLA_Search_Desktop.__txt&gclid=EAIaIQobChMIoIbPwK345gIVkeNkCh1fTgSNEAQYASABEgJS5_D_BwE&gclsrc=aw.ds. The top two parts are send to the payee and the bottom part is kept a a record of the payment details which can be much more detailed than would fit in the memo line of a personal check. Everywhere that I’ve worked that keeps hard copies of their paid invoices, staples this part to the invoice as a quick reference.
In turn, the payee can keep the second part of the check as proof (even after making a copy of the full two parts received) they received and deposited the check, usually attaching it to the copy as additional backup.
Two (the bottom third is blank) or three part checks are laid out on a letter sized sheet which can be feed through a inkjet or laser printer with minimal jams. A personal sized check(s) would require microperfs on the aide and top, increasing the chance of jams.
As mentioned above, business checks can also be ordered in special ledger size https://www.bank-a-count.com/ads/165/checks-business?gclid=EAIaIQobChMIoIbPwK345gIVkeNkCh1fTgSNEAQYBiABEgL5iPD_BwE for hand written checks, with the sub on the left used for additional info and a carbon copy sheet under checks.
Some companies have multiple bank accounts for different types of vendor payments and use different colored checks to easily be sure the payments are drawn from the right account.
And a silly, though real possible reason. Grabbing and hiding a handful of business checks is harder than a book full of personal sized checks. My Dad had his own business in the 70’s and I’ve never seen business checks single or in a checkbook like personal checks. Even if they were loose (though rarely if ever), they were always three up on a page.
I had to reconcile and recreate three years of a payroll company because the previous accountant cooked the books to embezzle money. I had to reconcile the bank statements of over a million dollars a month and a thousand payroll and company payment checks. So at least in Hawaii, physical checks are still used a lot!
I do a lot of temp accounting jobs and have worked for over a dozen companies over the past 10 years. No company I’ve worked for has ever not issued checks for some or the majority of payments. The companies ranged from single owner to multi-tens of millions of dollars annually. The company I’m currently work at just did a check run of fifty checks this week and will do the same next week and every week. Yes, checks are still used!
Another major advantage to checks, especially for larger companies is that with proper checks and balances procedures, it’s nearly impossible to for one person to write/sign a fraudulent check.
[ol]
[li]One person, usually the Accounting Manager or Controller reviews and approves the invoices for payment. In small companies it’s usually the owner. [/li][li]Another person in Accounts Payable processes and enters the invoice into the accounting system[/li][li]That person passes the list to the manager or controller who give them the proper amount of blank checks to print[/li][li]The printed checks are attached the invoices and passed to an authorized signer, usually the company Owner or President[/li][li]Checks over a certain amount may require a second signature, which could be a board member in charge of finance[/li][li]The signed checks are returned to Accounts Payable for mailing/distribution[/li][/ol]
I’ve had to go to the Owner or President’s home for a signature if they weren’t in the office.
Two companies I worked for were victims of fraud because they allowed one person to process the invoices, had free access to the checks and in one case forged the owner’s name. I don’t know and don’t want to know the full details of how it was done.
Bottom line is that in both cases, the proper checks and balances weren’t in place. There was nothing inherently wrong with processing checks.