Accepting Checks for Payment: Pros and Cons (For Small Businesses)

By Haley Davidson

Founder & Content Strategist, Gaia Content

As a small business owner, you may feel you can’t be selective about which payment methods you accept. Taking checks for business payments can help you expand your customer base—but there are some significant downsides that business owners need to be aware of. 

Allowing multiple payment methods, including checks, debit card or credit card payments, wire transfers, and ACH, can help you make more sales. 💸 In this guide, we’ll help you decide if accepting checks for payment is right for your business. 

We’ll also cover:

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How to accept check payments for your business

According to the Federal Reserve, only 7% of customers use paper checks to pay their bills. However, checks are still common in some industries—for example, nonprofits receive many checks and those in the professional services industry (like lawyers and accountants) may find that a large proportion of clients want to use checks. 

Depending on your business, some clients may prefer to pay with checks over other forms of payment. So, if you want to accept check payments, here are some steps you can take:

Step 1: Create a payment policy that states when and how your business will accept check payments. Consider things like whether you need to see a customer’s ID or if you will limit the amount that can be paid with a check. Depending on your business setup, you can post your policy to your online store or display it at your physical location. 

Step 2: Review your bank or financial institution’s policies for check deposits. If you want to use mobile check deposit, follow the proper steps for uploading the check image to your online banking account.  

Step 3: Make sure the check is filled out correctly. Checks should always include: 

  • The customer or payer’s name and address

  • The amount of payment

  • The name of the person or business being paid

  • The name of the payer’s bank or financial institution,

  • The bank or financial institution’s routing number 

  • The date of payment

  • The check number

  • The payer’s checking account number

  • The payer’s signature

Step 4: Watch out for counterfeit checks. Don't accept the check if any of the information listed in Step 3 is missing. There’s a risk the customer is trying to pay with fake or stolen banking information. You can always request an alternative form of payment.  

 ✅ Step 5: Verify the customer’s identity. You can request the customer’s identification to see if the check is legitimate. Ensure the information they provide matches the information on the check. If anything is different, consider requesting an alternative form of payment.  ✅

Step 6: Confirm the check date is correct. Let’s say a customer comes into your store and buys $300 worth of merchandise. They pay with a check and leave the store. You go to your bank to deposit the check, but you can’t because the date on the check is a week away! 

Remember: You can’t deposit a check until the date listed on the check. That’s why it’s essential to confirm the customer writes the current date on the check—not a day in the future. 📆

The downsides of accepting check payments

Checks are a practical payment method for businesses to accept. However, for many businesses, checks can add unnecessary complexity to their financial operations. Today, customers can choose from a wide range of payment options, so it’s important to consider all the downsides before you decide whether to accept checks for payment. 😬

Here are a few risks that come with accepting check payments for your business: 

Bounced checks 👎

If a customer pays with a check, but there are insufficient funds in the customer’s account, the check will bounce. If this happens, your bank may charge you a hefty returned check fee. 

Plus, a check can take several days to process, so the check writer and your merchandise may be long gone by the time you realize there’s an issue. Trying to track down a customer and reconcile a bad check payment can be time-consuming. Plus, there’s no guarantee you’ll get your money or merchandise back. 

Other payment methods may run the risk of insufficient funds, too. But with ACH or credit card payments, you can typically spot the problem faster and avoid paying any fees. 

Relay (that’s us! 👋) is an online business banking and money management platform that lets business owners open multiple no-fee checking and savings accounts. Then, you can mobile deposit checks from customers—and if they bounce, you won’t be charged a fee. (Though it’s still good practice to avoid bouncing checks when possible!) 

You can also receive wire transfers and ACH payments for free. With Relay, small business owners can avoid pesky banking fees when accepting payments from customers, whether they choose check payments or another option. 🙌

Stop payments 👎

If you have a physical storefront, consider that checks pose a stop-payment risk. If a customer pays with a check, they may leave the store and then place a stop payment on the check, which leaves you without proper payment. 

To complicate matters, if the funds have already been deposited into your account, a stop payment will debit the funds from your account. If you’re counting that payment as part of your revenue stream, a stop payment can seriously impact your cash flow.

Unnecessary costs 👎

Checks can be expensive to process. According to the National Automated Clearinghouse Association (NACHA), the organization that oversees the ACH payment network, ACH payments may cost $0.29 per transaction, while checks can cost $1.22 per transaction. If the bulk of your revenue comes from check payments, check processing fees can seriously cut into your bottom line. 📉

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Security 👎

Checks may offer more security features than cash payments. But paper checks can easily be misplaced or stolen. Plus, customers could pay with stolen checkbooks or counterfeit checks. 

Trying to reconcile fraudulent checks can be a nightmare for small businesses. Other payment methods, like wire transfers, ACH, debit cards, and credit cards, are safer alternatives. 

Time 👎

Bad checks can still slip through the cracks even when you take the proper steps. If you receive a bad check, there’s no guarantee you’ll be paid. 

If a customer doesn’t pay or does bounce a check, you could track them down and request payment. You could even work with a collection agency or contact the authorities. But all of these options may cost you time, money, and energy—that could’ve been saved by accepting alternative forms of payment. 

Should my business accept check payments? 

While accepting checks for payment can come with some challenges, it’s not all bad. 

For one, the more payment methods your business accepts, the more opportunities you have to make sales. Some clients prefer to pay with checks, so accepting this payment method could help broaden your customer base.

Plus, electronic check processing has made it easier than ever to deposit checks. For example, remote capture has made mobile check deposits popular for busy business owners. With remote deposit, you can deposit multiple checks anywhere, anytime, using your mobile device.

Ultimately, if your clients do want to pay you with checks, it’s worth considering the downsides and potential upsides. Either way, be sure to offer multiple payment options.

Alternative payment methods for small businesses

Whether you’re ready to stop accepting checks or want to offer more payment methods, you have more than a few options.

For online payments, you might consider debit card and credit card payments. You’ll just need to invoice customers through a payment processing platform like Stripe, QuickBooks Online, or Xero and turn on credit card payments. 💳

Next-day and same-day ACH payments are another fast, secure, and cost-effective alternative to paper check payments. These payment methods offer robust security features and low processing fees. Plus, they’re easy and convenient for your customers to send from their bank account to yours. 

Banking Built for Business Owners

No account fees or minimums; 20 checking accounts; 2 savings accounts with 1.00%-3.00% APY; 50 virtual + physical debit cards. Open account 100% online.

Learn more

How to stop accepting checks for payments 🛑

As you grow your small business, you may want to stop accepting check payments. Here are some tips to make the transition easier for you and your customers:

📝 Update your check acceptance policy. Let customers know that you no longer accept checks and offer them alternative ways to pay. Communicate why you’re updating the policy and be sure to offer some flexibility to customers who need it. 

⚒️ Set up other payment methods. Work with your payment process to set up ACH payments, debit or credit card payments, or wire transfers. Ensure you have the correct information from your customers before you initiate these types of payments. Check with your payment processor to see if there are additional steps you should take before making the switch.

📊 Don't forget about bookkeeping. Once you stop accepting personal checks from customers, you’ll need a way to track new types of payment. Be sure you tell your accountant or bookkeeper about the change and make sure payments are properly recorded during the transition. 

Stay on top of cash flow with Relay 💸

Relay is an online business and banking platform built for small businesses. With Relay, you can send and receive next-day and same-day ACH, wire transfers, and yes—even check payments.

Relay also integrates with accounting software like QuickBooks Online and Xero, so you can easily reconcile transactions and speed up bookkeeping. Ready to make the switch to Relay? You can sign up here. 😎