 In the last few months, I've been asked by several colleagues about improvements to their AP check disbursement process. My initial thought: in a year when we are seeing self-driving cars and talking about colonizing Mars, we're still mailing manual checks today? My answer: please stop. Below are 3 reasons why AP should stop cutting checks, and 3 ways to eliminate the practice in your organization. Why should AP stop issuing checks? 1. The time to manually print, put together approval packages, track down signatures, stuffing/mailing, etc. is time consuming. The overall time/cost of issuing checks is far more expensive than electronic funds transfers (EFTs). In fact, the cost of postage alone already exceeds the cost of an EFT transaction. 2. The accounting maintenance aspect of issuing checks also adds time to month-end close. For example, accounting has to ensure that checks printed are actually mailed by month-end (if not, a JE is required to add-back the cash to the GL). Also on bank recons, the outstanding check list must be reviewed – and in some cases older/stale checks may even need to go through the escheatment process. 3. Finally, vendors get paid faster with EFTs. This means less disruption to services for your business, and also less questions from vendors about payment status. Here are 3 ways to end the practice of issuing manual checks: 1. For vendors that are currently being paid via check, reach out and ask them to provide EFT payment details. Most vendors accept EFT payments, and what I’ve noticed over the years is that the only reason why some vendors were being paid by check was simple: no one has ever asked them for their EFT payment info! 2. On your new vendor setup form, take out “check payment” as a payment option. Require them to provide you with bank information. Gappify plug: to demo our online vendor setup form solution (which includes online Form W-9’s and ERP integration), please visit: http://www.gappify.com/demorequestvs.html. 3. Lastly, if you have the option, avoid doing business with companies that only accept checks. I understand that there are many larger/old-fashioned vendors that still only accept checks today (because of established processes they do not yet want to disrupt). But for boutique vendors, if they are unable to provide bank account information it may be a sign that their business is not established enough to service your organization. Ending the practice of issuing manual checks is a win-all proposition. Your AP team becomes more efficient, and vendors receive payments quicker.
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