Why are Paper Checks an Important Tool for Your Accounts Payable?
Employers have a variety of responsibilities as it relates to paying their employees. There are some processes that may be easier for the employer, such as electronic payments. There are options that may be more convenient for staff like paper checks. These are responsibilities that play a role in your accounts payable department. Depending on the size of your business or company, there may be pros and cons to dealing with paper checks.
The primary objective of accounts payable offices is to handle payments of their employers. In some cases, these are due to vendors and business suppliers. Employees are also included in the responsibilities of these departments. It is important to provide the type of payments that are preferred and expected by these groups. This can make these tasks challenging when there are multiple preferences for payment.
According to ADP, in 2013 employees nationwide were sent a letter in 2013 from the Consumer Financial Protection Bureau, explaining their payment options. These went out to hourly and salary employees, providing information about what their options were. Today, it is the responsibility of employers to comply with these processes by applying best practices approaches.
There are other ways to approach this process and to educate employees when the goal is to make changes to the system. These are additional financial investments that include training for employees that do not use traditional banking accounts. In order to move away from paper checks, it may be necessary to instruct employees on how to use electronic options and what the benefits are to them.
Accommodate Diverse Employee Needs
One of the reasons that employers have opted to continue to use paper checks is to accommodate their employees. There are diverse individuals in these groups, some of who do not understand or use electronic banking. Investor Junkie reports data conducted by the Pew Research Center showing that approximately 11% of adult Americans do not use the internet, at all.
Payroll and accounts payable departments have to provide these employees with an avenue to receive payment. This means that direct deposits and pay cards are not going to be viable options. Some companies are looking for ways to eliminate the use of paper products altogether. These new options, however, have to comply with the requirements of the National Consumer Law Center and accommodate employee needs.
Address Electronic Hacking and Fraud
There are individuals that have experienced the negative side of electronic payments and banking. Some have had their accounts hacked through fraudulent activities. Included in this number of employees are those that are now moving back to paper options for payment. In 2017, studies showed that 143M people had personal information hacked from a top credit bureau.The information that was in jeopardy included bank accounts, savings and checking data. In order to quell the fears of these employees, accounts payable staff was required to use paper checks. There are small businesses that also prefer issuing this form of payment. This is a way to easily monitor expenses by reviewing the checks that have been used.
Provide Second Level Tracking
Paper checks are sometimes considered to be an old-school model of payment. This may be true in some aspects but there are additional benefits to this process. These processes can serve to provide businesses and companies with a second level for tracking expenses. Those that make many purchases over the course of a month or a quarter may struggle with keeping track.
There are paper checks for businesses that come with a carbon copy imprint. Accountants and payroll staff will be able to see the funds that were being used during this time. This type of tracking can be critical to overall operations. There are business owners that use checks just for employee payroll purposes. They perform electronic payments for everything else the business requires, which helps accounts payable to track and keep records.