Small business problems with ‘bill pay’ services

One of the oddities of modern small business accounting is that banks have promoted services that send paper checks through the postal mail instead of transferring funds electronically. These are called ‘bill pay’ services. Some portion of these paper checks are ‘lost in the mail’ and some skeptical people wonder if this is the reason that banks promote the service. I have no way of knowing the volume of checks that are uncashed but it must be significant.

In 2014 I reported a scheme to the PA Department of Banking and Securities that one local bank was not recrediting lost checks to customer accounts. The state investigator replied that they were aware of the problem but had no budget to investigate or prosecute.

Other banks offer these bill pay services free to personal bank accounts but charge hefty fees to small business accounts. One client’s bank in New Jersey set the entry level fee at $50 per month for bill pay service.

Just yesterday I received an email from a client’s check recipient who earlier reported not receiving any check. The email said “Check did get here. Was filed with advertising since the return address wasn’t one we recognize”. I routinely hear of instances where recipients assume that these checks are junk mail.

These old-fashioned bill pay systems are simply a bad idea. The sooner we move to cheap and reliable electronic transfers the better, as far as I’m concerned.


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