Why This Old-School Payment Method Still Dominates Small Business

It could appear arduous to consider, however in 2026, most small enterprise house owners nonetheless use paper checks. 

The analysis exhibits this. In response to a 2024 examine from the Atlanta Federal Reserve, as a lot as 83% of small companies — these with as much as $10 million in annual revenues — use paper checks. One other examine by an out of doors cost processing agency discovered related (75%) outcomes. And Mineral Tree, a world funds processing firm, mentioned that in simply the previous 12 months, 57% of companies paid greater than one-quarter of their distributors through test. 

My very own expertise corroborates this. I go to and discuss to numerous small enterprise house owners yearly. And whereas many depend on digital cost for sure distributors, most are nonetheless doing their test runs the best way they’ve been doing them for years — even many years.  You’d suppose that, as youthful generations take over, issues would change? Nope.

How can so many enterprise house owners nonetheless be utilizing paper checks on this modern-day?  Is that this ignorance? No, only a good enterprise follow.

It’s not arduous to grasp. There are apparent causes to stay with paper checks. For instance, there are each the preliminary and longer-term service prices, in addition to the short-term disruption of transferring to an all-electronic cost system in comparison with the return-on-investment for not doing so. Many enterprise house owners don’t have the interior sources to implement such a undertaking. Others don’t wish to rock the boat with their suppliers. After which there’s easy demographics: nearly all of small companies are run by older enterprise house owners — these over the age of fifty — that aren’t solely set of their methods however not anxious to show issues the other way up to repair one thing that for them isn’t actually damaged.

However pretty much as good as these causes are, there are even higher the explanation why so many small enterprise house owners are sticking with paper checks.

It’s truly higher safety

Though the Atlanta Fed’s examine mentioned that utilizing paper checks comes with a extra important danger and incidence of fraud, I’ve discovered that these dangers will be simply mitigated, and actually are mitigated by a few of my smarter, extra financially-aware purchasers.

A very good system of inside controls ensures that every one checks are locked in a protected and solely launched from custody when a test run is made. Even then, good monetary managers maintain a strict watch on their test numbers.

Checks then undergo a technique of approval — manually matched to invoices after which topic to 2 signatures for disbursements over a specific amount. All of which means by the point a test is lastly put within the mail, it’s been in comparison with supply paperwork, reviewed, signed and verified by a number of individuals in a corporation, guaranteeing there have been quite a few units of eyes laid on the transaction. 

Doing so slows down the disbursement course of and provides individuals time to consider a transaction earlier than the cash goes out the door. My purchasers who pay electronically oftentimes arrange their system with fewer of those processes in place, leaving them uncovered to incorrect funds.

What about fraud? That is simply defended by a well-liked service that’s offered by most banks referred to as Optimistic Pay. That is the place an organization submits a listing of funds (together with test numbers, payee, quantity and date) to the financial institution prematurely, and the financial institution solely disburses cash when the test introduced matches that checklist. Most bankers I do know inform me this service works simply as nicely — if not higher — with guide checks introduced vs. digital funds submitted that may be topic to potential malware or hackers.

And talking of malware and hackers, firms which can be totally reliant on digital funds proceed to be uncovered to knowledge breaches and hacks. Digital cost techniques (ACH, wires, on-line banking) are main targets for fraud, and lots of assaults bypass the financial institution completely by exploiting individuals and processes. A 2025 funds fraud examine from the Affiliation of Monetary Professionals Funds Fraud reported that 79% of organizations skilled precise or tried funds fraud in 2024. A latest FBI report discovered that digital funds are central to losses for each enterprise house owners and banks, with cyber-enabled fraud accounting for 83% of all reported monetary losses and wire and ACH funds being key channels in profitable fraud instances.

The place paper checks actually win

All of those are good the explanation why an organization could wish to follow a guide test processing course of. Nevertheless it’s not the principle purpose why I see this so usually in my purchasers. That purpose is straightforward: higher money administration. Or ought to I say higher float administration?

That’s as a result of while you submit a cost to a financial institution, your cash is straight away gone out of your account, even when it nonetheless takes a number of days for it to reach on the provider. The financial institution is making its cash, however firms miss out on these further days of curiosity, which, relying on how a lot money you may have, could possibly be important.

There’s additionally the management issue.  Quite a lot of enterprise house owners I do know like to chop checks and put them in a drawer. The cash is out of their account so far as their books are involved. Nevertheless it hasn’t left the financial institution but, which could possibly be essential for firms dealing with money circulation challenges or in the event that they’re in the midst of a dispute. As soon as a test is put within the mail, there are nonetheless a number of enterprise days earlier than it reaches the provider after which will get cashed. All of those further days give the enterprise proprietor the flexibility to increase their money circulation just a bit bit, with out incurring curiosity prices or having to lean on different sources of financing.

All of those causes clarify why so many enterprise house owners are nonetheless doing their test runs the old-school approach: utilizing paper. It could go towards widespread conference. However they’re not improper.

It could appear arduous to consider, however in 2026, most small enterprise house owners nonetheless use paper checks. 

The analysis exhibits this. In response to a 2024 examine from the Atlanta Federal Reserve, as a lot as 83% of small companies — these with as much as $10 million in annual revenues — use paper checks. One other examine by an out of doors cost processing agency discovered related (75%) outcomes. And Mineral Tree, a world funds processing firm, mentioned that in simply the previous 12 months, 57% of companies paid greater than one-quarter of their distributors through test. 

My very own expertise corroborates this. I go to and discuss to numerous small enterprise house owners yearly. And whereas many depend on digital cost for sure distributors, most are nonetheless doing their test runs the best way they’ve been doing them for years — even many years.  You’d suppose that, as youthful generations take over, issues would change? Nope.