B2B Checks: Improving Electronic Conversion and Savings

Finally, companies have a simple solution that addresses the last mile of paper checks. Is now the time we will finally see the end of paper checks in America? Let’s look at where the industry is at and where it’s going to see what the future has in store for B2B check payments.

B2B check payments are frustratingly resilient. According to the 2022 AFP Digital Payments Survey, despite decades of effort to convert B2B checks to electronic payments, more than a third of B2B payments in North America are still made by checks. Fortunately, Viewpost and its network of partners offer a simple way for companies to attack the last mile of paper checks, improving electronic conversion and savings without business process change or extra effort. The high-value, low-effort solution generates substantial savings by converting checks to virtual credit cards at the time of payment, dramatically increasing card acceptance. Best of all, the solution can be implemented alongside existing card programs, saving companies even more. 

Why B2B Checks Persist

There are countless reasons B2B checks have lagged behind their consumer-to-business counterparts in transitioning to the digital world, and three themes stand out: complexity, cost, and confusion. These factors have arguably extended the life of paper checks by more than a decade. Here’s how:

Complexity: B2B transactions are inherently more complex than consumer payments. Where the latter can occur in an instant between a retail cashier and a customer, B2B transactions can involve dozens of people and take 30-90 days (or more) throughout the purchasing life cycle. As a result, the industry never focused solely on eliminating checks. Instead, they developed comprehensive accounting solutions, ERP systems, integrated payables, AP automation, and a plethora of technologies that likely promised a transformation to digital payments as a component of a more comprehensive solution. 

A problem with tackling a big, complex problem is that it often results in big, complex solutions. It goes without saying that technology has brought enormous efficiency to AR and AP organizations of all sizes, and there are fewer checks used to pay suppliers today than 20 years ago. However, the fact that one-third of U.S. payments, representing trillions of dollars, are still being sent as paper checks proves that the current systems have yet to be as effective at eliminating paper checks as most payment professionals had hoped.

Cost: While checks have always been costly and inefficient, change introduces a new set of expenses, disruptions, and frustrations. Over the past few decades, every company has already had systems and processes in place to handle sending and receiving checks. These systems often made it easier for companies to continue with the status quo rather than invest their time, human capital, and limited funds on technology upgrades. In addition, checks were so engrained in everyday business processes that it was easy for organizations to focus on other areas of inefficiency and thus further delay the inevitable end of B2B check payments.

Ironically, although payment innovations have become more accessible to small- and medium-sized businesses, the pace at which companies are transitioning away from B2B check payments has actually slowed in the past decade. According to AFP Digital Payment Surveys, B2B payments made by check in the United States and Canada decreased by 3.4% per year between 2004 and 2013 while only dropping 1.9% per year between 2013 and 2022. At the current pace, it would take more than 15 years before B2B checks are entirely eliminated.

Confusion: It’s common for significant industry transformations to experience delays brought on by uncertainty and confusion. Rapid innovation can be highly beneficial, except when it makes customers hesitant to invest in unproven solutions or choose one technology when a new and better one may be right around the corner. For many leaders, deciding which payment technologies to invest in and when can be career-making or breaking, especially when million-dollar budgets and months-long implementation timelines are involved. The evaluation process alone can take many months to years to achieve stakeholder alignment, receive budget approval, and allocate IT resources. 

Of all the reasons that B2B checks still exist, complexity may have played the most prominent part. The reason isn’t just because eliminating checks is complex but because trying to solve the greater complexity and inefficiencies within the payment life cycle took away the focus and attention needed to eliminate checks sooner. However, it could have been different.

A Different Perspective on Checks

Consider, for a moment, that corporate America is still printing B2B check payments because the industry had it backward. From the beginning of the digital transformation, AP departments, payment providers, and bank partners have worked hard to move suppliers to digital payments. At a high level, some suppliers chose to accept virtual cards, others prefer ACH, and everyone else (broadly 33%, today) continues to receive paper checks. These checks are then either printed by the payor or outsourced to a third party to be printed and delivered on the payor’s behalf. Curiously, the solutions that are supposed to eliminate paper checks, by default, leave their responsibility on the shoulders of the people who want to get rid of them.

Now, imagine it done differently. Suppose a company sent a check file to its bank or a payment partner. The payment provider could assume responsibility for enrolling suppliers for digital payments and delivering those payments electronically or as checks, depending on each supplier’s preference. The payor would be immediately and forever done printing checks, and they would no longer need to manage multiple payment methods. Instead, the responsibility for these duties would be transferred to the organizations that are best equipped to handle this type of work and have the greatest incentive to find the most efficient way to deliver payments across all payors. While this approach sounds like consolidated payables, it wouldn’t require payees to manage an ever-changing list of vendors and multiple payment methods. It would be more like how packages are delivered.

Today, when you send packages, you only need to tell the shipper where the boxes are going and when they need to arrive. You don’t tell them how to ship them. The shippers are the experts, and it’s up to them to determine the most efficient delivery method. What’s essential is that packages arrive on time, recipients are happy, and hopefully, the shipper’s increased efficiency saves you money. The same could be true for checks.

Had this path to digital payments been offered in 2002 or even 2007, it’s conceivable that B2B checks would be nearly or entirely a thing of the past. Regardless, it would have relieved corporate America of its check printing responsibilities 15 or 20 years sooner.

While the industry can’t go back and change its past, some payment partners are now offering this type of service to address the last mile of B2B check payments.

Payment Providers Focus on Check Optimization

The fastest and easiest way for companies to stop printing checks is to outsource the service to a third-party printer or bank that offers check printing. However, companies have not historically been incentivized to go this route. Plus, traditional outsourcing didn’t eliminate the checks. It just took away the responsibility of printing them. 

Recently, this has changed. Some companies that provide B2B check printing are augmenting their services by adding a check optimization process that converts checks into digital payment in real-time. The approach further increases the adoption of digital payments while generating incremental savings by creating more virtual card transactions from check payments missed by an existing card program. Check optimization can enable companies to earn rebates that can offset the cost of check printing and generate rebates many times greater, all without extra effort. 

Why Now is Different

In the past, the industry relied heavily on rip-and-replace solutions that required significant investments to implement broad-scale solutions. However, increasing collaboration and interoperability between financial institutions, fintech companies, and industry solution providers has created a plug-and-play environment for solving AR and AP challenges. This evolution enables companies to implement technology focused on solving specific issues without disrupting existing processes, and it’s why now is different for B2B checks.

It’s promising that, yes, the end of B2B checks is near. But, of course, exactly when it occurs depends on your perspective. For companies focused on eliminating the costs and overhead required to print checks, the time is now. There’s never been a better time or easier way to stop printing checks and increase savings.

Checks have supported American businesses for over a century. While it’s clear that their end is inevitable, they can go out on top, delivering an encore performance that generates substantial savings for payors at a time when every dollar counts. 


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