As both the federal government and payments industry stakeholders work to curb check usage, the days of check payments may be numbered. Some retail businesses, like Target, have even stopped accepting them. But the U.S. has been trying to phase out checks for decades, and they are still in use. As new payment methods proliferate, many accounts payable (AP) and accounts receivable (AR) departments would like to eliminate checks altogether to reap the benefits of more efficient digital payments.

A Slow Transition

Even after the COVID pandemic forced many companies to digitize their payment systems and processes, checks still stubbornly hang on. Among respondents to the 2025 AFP Payments Fraud and Control Survey, 91% report that their organizations are currently using checks. Larger businesses are shifting to digital payments, but many smaller enterprises are holding onto paper.

The pressure to digitize is increasing; the Trump administration has issued an executive order requiring government agencies to cease issuing paper checks as payment, effective September 30, 2025. All executive departments and agencies “must transition to modern, electronic funds transfer (EFT) methods like direct deposit, debit/credit card payments, digital wallets, and real-time transfers,” the order states.

Will this move help to push checks out of business-to-business (B2B) payments? It remains to be seen, but businesses might be better convinced to switch from paper to digital if they look closely at the challenges and costs of checks.

The Trouble with Checks

Checks do have some advantages. They are easy to trace and reconcile. They contain all necessary remittance information. But the drawbacks outweigh the benefits. Checks are:

• Expensive. The median cost per check transaction is $2.01-$4.00, according to the 2022 AFP Payments Cost Benchmarking Survey — considerably more than other payment types. By contrast, the median per-transaction cost of ACH payments ranges from $0.26 to $0.50, while credit and debit cards have a median cost of $1.50. Even the most expensive digital payment type, instant payment, costs less than checks, ranging from $0.01 to $2.00 per transaction.
• Vulnerable to fraud. Of all payment types, checks are the most susceptible to fraud. In the 2025 AFP Payments Fraud and Control Survey, 65% of respondents say that their organizations experienced check fraud in 2024 (while just 33% experienced ACH debit fraud). In particular, the incidence of lost and stolen checks in the mail has increased dramatically.
• Slow. Check payment cycles can last as long as 14 days, lengthening days sales outstanding (DSO) and hindering cash flow. Dealing with lost or stolen checks takes even more time.
• Prone to errors. Because checks must be handled manually, the risk of errors is higher, costing time and money.
• Lacking in finality. Payers can cancel or stop payment on checks, or the checks themselves may come from an account with insufficient funds.

Solving the Problem

The solution, of course, is to get rid of paper and embrace digital payments — and optimally, to automate AP and AR processes.

Many businesses are already well on their way. AFP’s 2022 Digital Payments Survey found that 73% of organizations are moving their B2B payments from paper checks to electronic payments. Viable digital payment options include:

• ACH payments, which take one to three days to process, with a same-day option that is slightly more expensive. ACH transactions are generally safe, thanks to data encryption and secure third-party servers that transmit and store data.
• Credit and debit cards, which are familiar to most vendors and customers. Card payments are processed almost instantly and are secure due to protections offered by the major issuers and encryption capabilities.
• Instant payments, which are enabled by The Clearing House’s Real-Time Payments (RTP) network or the Federal Reserve’s FedNow service. These transactions are transferred immediately from account to account.

No matter which type of digital payment a business chooses to send and accept, it will be faster than checks. That means more predictable cash flow, improved liquidity, more working capital and shorter DSO.

Winning Buy-in from Customers and Suppliers

Of course, customers and vendors must be persuaded to use and accept digital payments. Some suppliers are reluctant to send their bank information through what they perceive to be unsecure channels, and they may see digital payment methods as more costly than checks. Companies can reach out to these vendors to inform them about the safety, cost savings and other advantages of accepting digital payments. If suppliers still balk, businesses can opt for the stick over the carrot by choosing to work only with suppliers that accept the preferred payment method.

Convincing customers to pay with electronic payments requires education as well. Michelle Murdock, Credit and Accounts Receivable Manager at Mitutoyo, a Japanese multinational corporation specializing in measuring instruments and metrological technology, reports that Mitutoyo has seen a significant uptick in digital payments since launching a customer communication campaign. Through email and other channels, Murdock and her team have “promoted the positive” aspects of digital payments, she says. “For example, eliminating mailing time allows room for more orders, especially if the customer is on credit hold and stop-ship status.”

Murdock continues, “We sent out promotional emails that included, ‘Contact me for faster, easier electronic payment options.’ We offer electronic payment options first, with a quick reference to their benefits. Our emailed invoices and reminders include the time it takes to process different payment types.” 

For any customer that requests information about ACH payments, Murdock’s AR team sends a letter explaining how it works, how the customer can set it up with their bank, a reference to the NACHA website, and technical information like Mitutoyo’s preferred format for addenda records. Mitutoyo obtained supporting information from its bank; NACHA also offers such materials.

The campaign “has been very helpful,” Murdock says. “It has resulted in a huge transition.”

Toward Automation

AP processes are further along on the digitization and automation journey than AR. NetSuite reports that two-thirds of finance professionals expect to fully automate their AP departments this year. A study by research company PYMNTS found that 64% of mid-size companies — those with annual revenues between $3.5 million and $15 million — have at least partially automated their AP disbursements. 

Thanks to the resulting efficiencies and accuracy, 93% of these companies plan to automate more processes in both AP and AR. And AR is ripe for transformation. For example, matching payments data to remittance data can be one of the most tedious and time-consuming processes in enterprise payments, especially when it is manual. According to PYMNTS’ “B2B Payments Innovation Readiness Playbook,” 87% of firms with automated AR say that their overall process speed has improved.

Even more important, digital payments come in faster than checks. Firms that have automated their AR processes have an average DSO of 40 days, while firms that have not average 47 days, the PYMNTS playbook says.

Thriving in Uncertain Times

Businesses that digitize and automate AP and AR reap not only the benefits related to cost, efficiency, fraud, customer service and working capital, but also the competitive advantages enabled by data and analytics. These capabilities yield extensive, deep insights about customers, vendors and companies’ own processes.

In a time of economic uncertainty and volatility, businesses — especially smaller ones that may struggle to stay afloat — can benefit substantially from digitization and automation. Modernizing payments can help businesses of all sizes to survive, thrive and stay ahead of competitors.

Don't miss Michelle Murdock's session, “Overcoming Check Challenges for AP and AR,” at the AFP Enterprise Payments Virtual Series event, Transforming Transactions: Redefining AP & AR. This four-part, complimentary event on June 25 provides attendees with insights on modernizing and revolutionizing enterprise payments through automation, AI and more.

Fill out the form below to register for the event. To register and attend, you must have a Zoom account. Sign up here for a complimentary Zoom account.