Running a small business requires owners to make many daily decisions, including how to handle payments.

Checks have long been a staple in business transactions due to their familiarity and straightforwardness; however, the evolving financial landscape presents alternative payment methods that can be more efficient and secure.

Here are tips to streamline and secure your small business via alternative payment options:

Benefits vs. Risks of Checks

Checks are a well-established method of payment, and many business owners and customers trust using checks due to their long history. However, checks can be susceptible to fraud, including check washing and forgery, which has risen significantly in recent years. Lost or stolen checks can also lead to unauthorized transactions.

Business owners can control when a check is written and sent, which can provide greater command over payment timing to help manage cash flow. On the flip side, checks can take several days to clear and require physical handling and transportation, which can be inconvenient compared to electronic payments and result in increased costs on time and transportation.

Alternative Methods to Streamline Payments

1. Electronic Funds Transfer (EFT): EFTs are secure, fast, and reduce the risk of lost or stolen payments. They offer immediate transfer of funds, improving cash flow management.
2. Automated Clearing House (ACH): ACH offers a cost-effective alternative for recurring payments and bulk transactions, while also providing a secure and reliable transfer method.
3. Credit and Debit Cards: These payment methods are widely accepted and convenient and are also processed quickly, enhancing cash flow. Customers also often prefer card payments due to ease of use.
4. Online Payment Platforms (e.g., PayPal, Square): These platforms are often easy to set up and use, offering integration with e-commerce, which can provide quick access to funds and detailed transaction records.
5. Mobile Payments (e.g., Apple Pay, Google Pay): These solutions are convenient for customers, especially in retail settings. Payments are also processed instantly, improving cash flow.

Educating Business Owners

To effectively transition from checks to alternative payment methods, small business owners may want to consider the following:

• Evaluate Business Needs: Assess the specific payment needs of the business, considering transaction volume, frequency, and customer preferences.
• Understand Costs: Compare the fees and costs associated with different payment methods to choose the most cost-effective option.
• Enhance Security Measures: Implement security protocols for electronic payments, such as encryption and fraud detection.
• Train Staff: Ensure that employees are trained on how to handle and process various payment methods to avoid errors and fraud.
• Communicate with Customers: Inform customers about new payment options and how they benefit them in terms of convenience and security.
• Stay Updated: Keep abreast of new developments in payment technologies and regulations to ensure compliance and efficiency. Check in regularly with your banker to stay informed.

While paper checks offer some benefits for small businesses, such as familiarity and control, the risks associated with fraud, processing delays, and manual errors are significant. By exploring alternative payment methods like EFT, credit cards, online platforms, mobile solutions, and ACH payments, business owners can improve security, efficiency, speed, and customer satisfaction.

Each of these alternatives come with a host of benefits, but fees, complexity of setup, and speed of processing can vary among the options. Speaking with your banking partner can be a great way to evaluate your options and determine what is best suited for your business.

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Jeremy Shackleford is Senior Vice President, Director of Small Business Sales for WSFS Bank. He joined WSFS in 2018 after 22 years working in banking and financial services, and was most recently Senior Vice President, Regional Manager for the bank’s Greater Philadelphia Market, where he oversaw 15 Retail Office locations. He also served 10 years as a member of the U.S. Air Force (AFSOC).