Checks and Balances: Why You Should Stop Writing Checks
When was the last time you wrote a paper check? Financial transactions have evolved significantly in the digital age, revealing the weaknesses of check-writing, which is now far less common. With the advent of debit cards and accessible electronic transfers, most people write only a few checks per year. Most participants in an informal LinkedIn poll said they wrote checks only for gifts and odd jobs.
However, many businesses, including veterinary hospitals, continue to write checks regularly. This practice not only opens the door to potential fraud, but also can unnecessarily complicate your finances. After all, a check is only a piece of paper with a pinky promise to pay.
The downside of checks
Writing checks can expose your practice to financial fraud, or “check washing,” which involves thieves stealing checks from the mail and changing the name or amount on the check. You likely think this won’t happen to you, but at least three VetBooks clients have suffered at the hands of check fraudsters.
Checks can also delay and complicate the reconciliation process, straining your bookkeeper and muddying your records. Unlike digital and card transactions, checks require manual tracking, and unless detailed memos are written on each check, your bookkeeper may be delayed in categorizing the expenses covered and struggle to follow the check from issuance to cashing.
Advantages of digital transactions
Instead of writing checks, we ask our VetBooks clients to prioritize digital payment methods. Advantages of electronic funds transfers (EFT), automated clearing house (ACH) transactions, and credit or debit card payments include:
- Enhanced security features — Digital methods are less susceptible to fraud compared with physical checks because they are encrypted and can be monitored for suspicious activity.
- Immediate reconciliation — Digital transactions facilitate real-time reconciliation, which allows bookkeepers to maintain accurate financial records and reduces discrepancies that could impact operations.
Efficient operations — Digital payments streamline the bookkeeping process by automatically recording detailed information about each transaction, so manual entry is not necessary, and workload is reduced.
How to write checks safely
Sometimes, check-writing is your only option. Ask your vendors if they are willing to work with you to minimize the need for checks, but if they are necessary, the following tips can make the process safer and easier:
- Record detailed memos on every check — Write the invoice number and the expense detail on the memo line to help bookkeepers categorize the expense accurately without additional clarification.
- Keep copies of written checks — Always keep copies or photos of written checks to help bookkeepers verify expenses and protect you from fraud. We recommend checking with your bank to determine if your existing account services include copies and, if not, adding them.
- Choose secure, traceable mailing methods—You told them the check was in the mail, but is it really? Secure, traceable mailing methods or courier services can help ensure important checks reach their destinations or intervention should a check go missing.
While checks are a traditional and sometimes necessary payment method, they often create unnecessary risks and challenges. The VetBooks team strongly encourages clients to transition to updated digital payment methods to streamline the books and reduce risking financial losses and a heavy administrative burden. Minimizing checks is a small step that will assist us in maximizing your practice performance. For more information, contact us to schedule a meeting.
