When was the last time you wrote a cheque?
For me, I cannot remember. I have an ancient box of business cheques somewhere in my office, collecting mold. They are so old that the address is incorrect.
Think of it, dear reader, it is Covid 19 times. You are a mid-sized business. Perhaps multiple locations. Cheques need to be signed by at least two people.
The problem is hardly anyone is working at the office anymore.
What do you do? Sign the cheque and mail it to the next signer? Yikes!
This is just so wrong.
The Entire Cheque Cycle is Slow
That cheque, with one signature, is now in the physical Canada Post eco-system.
How long will it take to get to second signer? And then to the supplier? A week? 10 days? Two weeks? Oh my.
But wait! You have solution! Just pre-sign a stack of cheques and leave them with second co-signer. That will solve the problem, right?
Some of you may be either laughing (thinking of the obvious – the controls of 2 signatures have just been broken). Others, are thinking, “would anyone actually do that?”
It is done all the time.
Never Pre-Sign Cheques
A company we knew had the business owner pre-sign a stack of cheques for the bookkeeper to pay bills.
They were kept in the safe. “Safety first”, correct?
The bookkeeper had a new baby. The costs of giving her sweet baby everything she deserved was high. Toys are expensive on a bookkeeper’s salary.
These signed, blank cheques were sitting there, a severe temptation. Like wine in the fridge to an alcoholic.
Would the owner even notice if a few cheques ended up supplementing her low wage?
She secretly filled out some cheques payable to her credit card, not the owner’s. This went on for years.
She coded the “expense” to inventory. (Perhaps she was thinking how fitting – inventory of toys and things for her baby).
The owner never discovered the fraud. Finally, (and this is usually how these things are revealed), she took a holiday. The relief bookkeeper could not reconcile the bank. She got suspicious, and uncovered the fraud.
The morale of this story is – never pre-sign cheques.
Why Do You Trust the Physical and Not the Virtual?
When a signed cheque leaves your office, it can be intercepted.
Think of all the stops along the way. Your office (before it is mailed). The mailbox. The routing stations at Canada Post. The office where it is being sent to.
It is a crap shoot.
Cheques intercepted are acid washed. The payee changed. You would not recognize your signed cheque when you see it.
Compare This to an Online System
We use a Canadian company called Plooto for online bill payments.
Bills approved for payment in the accounting software are synced to Plooto. The source documents move with the bill.
Inside Plooto you can set a simple or complex payment approval matrix.
Payment approvals can be set to require multiple approvals. Dollar amounts can be set so that the owner is not having to sign everything.
Everything is approved virtually, online.
There is an audit trail.
The payments go through the Canadian payments approval process, just like a cheque would.
The supplier can receive the payment via email. They log into their bank using their own bank credentials and deposit the money you are sending.
Some Interesting Stats
Australia has virtually eliminated cheques. The banks charge about $50 to process a cheque. Not much of an incentive to use cheques!
The overall numbers are interesting – 5% of payments are paid by cheque in Australia.
In 2019, 39.38% of all payments were by cheque. If you remove personal payments, the business cheques are significantly higher.
My coaching – stop writing cheques.
You will save time, money, and reduce risk of fraud.
And in Covid 19 times, online bill payments just make sense!