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The Decline of the Paper Check: Benefits & Challenges

A recent study revealed that the use of checks for business-to-business (B2B) payments continues to decline rapidly; in fact, it dropped more than 30% over a nine-year period.1 Consumer check usage is also becoming less frequent.

So, is the paper check going to become extinct? This article will present the technological and financial trends, impacts, benefits, and challenges of moving to electronic A/P processing.

The Paper Check’s Last Stand?

Many manufacturing, health care, and retail businesses have decreased their reliance on paper in order to improve processes, become more efficient, and protect their profits. However, in construction, issuing paper checks is still one of the most trusted methods of controlling how money flows out of the business, and many seem to fear changing that process.

Dan Finnegan, CFO at Alegis Construction, shares his thoughts on change and alignment with goals: “I know change can be unsettling, but when you rock the boat, you will attract the people who are willing to change with you and that will speed your effort. We have a goal of doubling our revenue from $40 million to $80 million in a five-year span. We don’t want to add overhead to accomplish that, so we aim to get away from paper and go electronic with documents as much as possible – payroll, payments, subcontractors, everything. It’s essential we be fully automated to grow and scale.”

When Finnegan began working in construction about a decade ago, he was surprised to learn that the U.S. was behind Europe in terms of moving away from paper checks; noting that, in his view, 70% of payments in Europe were electronic compared to 0% in the U.S.

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About the Authors

Henry Ferguson

Henry Ferguson is involved in Business Development for Prophix Software in the Portland, Oregon area.

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Dan Finnegan

Dan Finnegan is CFO and Controller at Alegis Corporation in Sammamish, Washington.

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