As a program director, you’re familiar with hidden costs. You know providing lunch or planning an art project will cost you more than the just price of the food and supplies. Planning time, preparation, shopping for supplies, and cleanup time are only a few of the extra expenses that need to be accounted for.
Likewise, many back office decisions, like how you accept payments, have their own hidden costs. When making these choices, many small and medium size businesses fail to consider the costs of accepting paper checks.
How much does it cost me to accept paper checks? According to a survey by NACHA, accepting paper checks costs your business an additional $1.50 in actual processing costs over digital payment methods. But hidden costs can raise that to almost $8 per check!
But I don’t pay fees to deposit checks, right? Well… sometimes you pay fees for checks. Business checking accounts often charge fees for additional deposits beyond a pre-set limit. That limit can be as low as 25 items a month. Also, checks can be returned for a variety of reasons, from insufficient funds to incorrect information. Many banks charge a substantial fee for each returned item.
So what are these processing costs for accepting paper checks? Unlike digital payments, paper checks need to be collected from parents, manually recorded into your accounting system, prepared for deposit, and then taken to the bank or manually scanned and uploaded for deposit. Once a check is deposited, you still have to verify the check cleared and follow-up with busy parents if there is a problem. All these steps require time from you or your staff—time you pay for.
And the Hidden Costs? What Are Those? Accepting paper checks can cause a business serious cash flow headaches. According to Wepay’s SMB & Money Survey, 41% of businesses report having experienced cash flow challenges in just the past year. Paper checks are a major contributor to cash flow issues.
Not knowing exactly when your account will be credited or for how much complicates your cash flow management plans and that costs you money. According to WePay, businesses that process all of their payments digitally have a 15% fewer cash flow management issues. With digital payment platforms like Curacubby, you know that a payment is valid the instant it is made and have the money in your account faster.