3 Reasons Why Construction Contractors Should Stop Mailing Paper Checks
Paper checks have been a business staple for decades. And construction contractors are just as attached to them as any other business executive.
In years past, checks were the simplest way to send payment. But times have changed, and technology has brought better ways to send money from business to business. Here are three reasons why leaders in the construction industry are moving away from writing paper checks and stepping toward more efficient ways of doing things.
1. Paper Checks are Expensive
Ordering a stack of paper checks every once in a while might not seem like a big deal. But by the time you pay to have the checks printed and add on the mailing costs, a single check can cost a contractor as much as $20 to issue [Wall Street Journal]. The cost of envelopes and stamps to mail checks can also add up. When you consider that many digital payment solutions offer free or low-fee direct payment options, mailing paper checks no longer makes any financial sense.
2. Mailing Checks Increases the Risk of Fraud
Payment systems will always be a target for fraud. But the use of paper chairs, particularly when placed in the mail, puts construction contractors at an increased risk of fraud. In 2020, nearly 75% of organizations were targets of payment scams, and paper checks were one of the payment methods that were impacted the most by fraud activity [Association for Financial Professionals]. As many as eight people can handle a paper check sent through mail before reaching its final destination. And every hand that touches the check increases its vulnerability to fraud.
3. Mail is Slow
There’s a reason it’s often called “snail mail.” In the age of instant gratification, waiting 2-3 days for a paper check to arrive in the mail can sometimes seem unreasonable. Add the amount of time it takes to deposit the check on top of the mail delivery time, and sometimes you’re looking at a week before the funds hit the bank. This can wreak havoc on a construction company’s cash flow, not to mention those of your suppliers and subcontractors.
The use of the mail also introduces the possibility of the check becoming lost or otherwise compromised. What contractor wants their payment to a subcontractor to be lost in the mail? The construction industry is already notorious for paying its employees late [Global Trade Review]. Paper checks being sent by mail are only perpetuating the problem.
CoFi is Here
Are you still sending paper checks in the mail? There’s a better way. CoFi is the digital payment solution you’ve been waiting for. Our innovative software is designed with construction contractors and lenders in mind to simplify the payment processes and reduce the inefficiencies that have plagued construction lending for years. CoFi technology offers modern construction finance by bringing consistency and predictability to the construction finance relationship. See how CoFi can help your business. Schedule your personalized demo today!