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The Importance of Company Cheques

The Importance of Company Cheques

Many businesses around the globe prefer to use company cheques as a means of meeting their financial obligations. Cheques are a traditional form of payment that is largely accepted by many businesses, making it not only ideal for the issuing party but also convenient for the receiving parties.

Recent years have seen a sharp increase in cheque frauds, but financial institutions have also responded by devising cheques that are more secure as a way of maintaining the integrity of this form of payment and reassuring businesses that it remains a safe, reliable, and convenient mode of making payments.

If you are still doubtful about the use of cheques as a way of making payments in your business, then read below to learn just how important cheques are to a company and some of the benefits that accompany this mode of payment.

Cheques Leave a Very Clear Paper Trail

Whenever there is financial misappropriation and funds need to be traced right from the time the payment was issued, it sometimes becomes difficult to follow the paper trail if cash or credit cards were used as the mode of payment.

Cheques, on the other hand, will always leave a very clear paper trail that can be traced right from the issuing party to the receiving party. This is because, with a typical cheque payment, there will be details of the recipient, the amount received, the date the cheque was issued, the date of clearance by the bank, and the signatories in the cheque.

Having such a detailed paper trail is not just ideal for preventing or investigating fraud, but also for maintaining clear records for future references by all parties involved.

You won’t find such details with other means of payment such as cash.

Paper Cheques Are Relatively Secure

Paper cheques are generally secure since only the named recipient has the authority to present the cheque to a bank. In instances when the recipient claims to not have received the cheque, the company that issued the cheque will simply call the bank and make inquiries about who presented the cheque.

In case discrepancies are found, then such will always be solved by the bank directly. Unlike cash, cheques have written proof that payment was made, and the recipient can’t deny that they haven’t been paid if a cheque had been issued in their name.

Cheques Are Simple to Process

The other benefit that comes with cheque payments, especially for small businesses or small startups, is that they are a very simple process. Businesses that are just starting out may not have the capacity to process payments electronically or use online payment processes because they still lack the funds or the volume to make payment methods viable.

However, getting a cheque as a payment or giving out a cheque as payment is quite easy since all the processing is done by the bank – all they must do is present the cheque and then wait for the money in their account.

With Cheques, Funds Leave the Bank More Slowly

Again, this is something that can benefit small businesses or firms that may still have cash flow issues. Unlike electronic or online payments which are usually instant, cheques take some time to process – at least two business days.

This means that it will take about two business days for the money to leave the company’s accounts. For businesses with cash flow issues, this may just be the leeway they need to ensure that they don’t fall back on their obligations.

Cheques Can Increase a Company’s Customer Base

Currently, businesses have a myriad of ways to accept payment, including cash and online payments. If you indicate your willingness to accept company cheques as a means of payment, you will potentially increase the number of clients or customers that you can work with.

However, if you state that you don’t accept cheque payments, then you will be locking those customers or clients who were willing to pay you through cheques alone. Therefore, to ensure that you are accommodating everyone and that no one is being turned away because you don’t accept their preferred mode of payment, be open to receiving cheque payments also.

Cheque Payments Are Traditional and Reliable

The use of printed cheques is one of the oldest and most traditional forms of payment. It is not only accepted by many businesses of all sizes and compositions around the globe, but is also a trusted means of issuing payments or getting paid. With cheques, all you have to do is prove your identity and you will be good to go.

Cheques Come With Increased Security

Printed cheques nowadays come with detailed and elaborate security features that make them difficult to intercept or alter in any way. As such, it is not easy for fraudsters to use them to swindle companies of their finances or change the recipient’s details so that other persons other than the intended recipient get to benefit from the check.

Unlike electronic or online modes of payments, cheques are relatively secure, and they come with the right checks and balances to minimize the instances of fraud or scams.

Easy Control for Businesses

Another glaring benefit of using printed cheques is the degree of control that they allow businesses when it comes to making payments. With paper cheques, there is usually lots of control in the accounts payable department which ensures that the cheques are written in the right amount and to the proper recipients.

A manager may authorize a cheque to be written only after they have thoroughly reviewed the backup documentation. After that point, an employee will be permitted to actually print the cheque. Additionally, that cheque may then have to be signed by a senior manager before it leaves the business.

As such, the cheque issuance process passes through three employees, leading to minimal chances for errors or fraud.

20th Oct 2021

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