Why America Still Loves Checks: The Correlation Between B2B and Consumer

It seems that each year, we say that this will be the tipping point when we will finally move beyond our dependence and preference for paper checks and embrace electronic payments – whether it’s making payments or receiving them.  In an a Bloomberg article published today and authored by Katie Robertson, she asks: Why Can’t Americans Ditch Checks?  She goes on to illustrate how consumers in most countries – including Canada – have done a much better job of moving away from checks.  There is a direct correlation between consumers using checks to pay for any number of things, such as groceries, utilities, rent, etc., and businesses that still pay suppliers via check and those suppliers that not only accept them but still prefer them.

In our recently published 2017 Perceptions Study – Analysis of Invoice-to-Cash practices and preferences of supplier organizations, we report that 87% of respondents to our survey indicate that they still receive paper checks from their customers.  One key reason for popularity around checks is the comfort level people – and businesses – have with them.  Robertson’s article indicates that rural and older Americans may still use checks because it’s what they’ve always used.  Furthermore, checks are still common in B2B transactions because for many, old habits die hard.

Respondents to the 2017 Perceptions Study indicate that they still use and accept checks because they like to feel the check in their hands as well as enjoy the process of taking the check to the bank and depositing it into their account.  In spite of the fact that these manual payment cycle processes extend DSO and, depending on how invoices are submitted on the front end, could delay realization of payment by up to one to two weeks.

The Federal Reserve is making strides to help modernize the country’s payments infrastructure, but it will take some time because changes to US processes such as payments are usually driven by the market, not by government mandate.  In the meantime, checks will remain prevalent, whether an individual is paying rent or a business is paying their supplier.

To read the full 2017 Perceptions Study, download it here.

Ernie Martin is Founder and Managing Director of Receivable Savvy. He brings over 25 years of experience in financial supply chain management, marketing and communications and draws upon his extensive experience to share knowledge and best practices with AR professionals. His resume also boasts time at several well-known brands and companies such as Tungsten Network, Delta Airlines, CIGNA Healthcare and Georgia Pacific as well as a number of years as an independent consultant.