Deep Dive: Why Paper Checks Still Factor Into B2B Firms’ Payment Optimization Plans

Companies worldwide have been moving toward B2B payments digitization for decades, with many anticipating significant changes to how businesses operate as well as an increased abundance of digital payment methods in the years ahead. Eighty-one percent of business professionals expect the growing availability of real-time or 24/7 payments — electronic transactions that can be made or received at any time of day — to “dramatically transform” how business is conducted. Other studies point to the increasing prevalence of digital payment methods like ACH, which is quickly becoming the payment method of choice for some companies.

These developments do not mean that traditional, paper-based payment methods have fallen completely out of favor, though it is true that businesses in most industries — with some outliers, such as those in the health insurance space — no longer rely on paper checks or manual invoicing to the extent that they once did. Paper check use accounted for 81 percent of U.S. B2B payments in 2004, for example, but they represented just 42 percent of such payments by the end of 2019. Data from a March 2020 PYMNTS playbook found that 81 percent of businesses still pay other firms via paper checks, however, making it the most common B2B payment method, even amid companies’ pandemic-driven digitization efforts. Another study found that, while check payments’ overall volume is declining, the average value of typical paper check payments is increasing, rising from $526 in 1998 to $2,600 by the end of 2020.

Transitioning away from paper checks can also be a challenging and gradual process for companies, particularly for small to medium-sized businesses (SMBs), and this is leading some firms to examine how they can move toward B2B payments digitization while accommodating the manual payment process to which they are accustomed. The following Deep Dive examines why the “death of the check” has not yet come to pass as well as how businesses can continue to digitize and optimize their payments processes while making space for the check payments that many clients and partners still use.

How The Pandemic Accelerated Manual Payment Friction

Numerous business professionals have foretold the death of the check for decades, but the payment method remains an essential part of the B2B payments process for many companies. Firms today rely on paper checks for several reasons, including the simple fact that many firms are more familiar with the payment method and likely to utilize it despite its friction points. Many companies’ traditional accounts receivable (AR) and accounts payable (AP) processes are designed to accommodate all aspects of paper check payments, making it difficult for some to shift to entirely digital B2B payments.


Despite paper checks’ foothold in the B2B payments space, many companies — specifically SMBs — are beginning to struggle as the payment method grows more costly and complicated to maintain. One report found that it can cost SMBs $22 on average to process a single paper invoice, for example. The costs and other pain points related to checks and paper invoices have only increased since the pandemic began, with a September 2020 PYMNTS study revealing that more than 49 percent of businesses cited manual processes as one of their most critical friction points within their AR processes.

Companies are, therefore, examining how to integrate automation technologies and other tools into their B2B payment processes to remove key friction points and reduce costs. Eighty-three percent of businesses have made their AR processes digital in some capacity over the last year, while 70 percent plan to implement technology to optimize their AR processes within the next few years. Businesses are undoubtedly beginning to reexamine their B2B payment strategies as their needs shift, but it is important to note that not all of these companies wish to ditch paper checks entirely.

Changing The Paper Check Conversation

Many companies interested in B2B payments optimization have, nevertheless, been reluctant to completely relinquish their use of checks. Paper checks still represent a hefty $21 trillion that moves through the U.S. economy each year, and some experts estimate that 40 percent of all B2B payments in the market are still made through this method, meaning they play a critical role for a large share of businesses.

Businesses still view paper checks as a trusted B2B payment method, and its continued popularity demonstrates this. Rather than replacing checks entirely, a growing number of businesses are beginning to incorporate digital methods into the mix alongside the check-based options with which they are familiar. The current B2B payments environment requires firms to fundamentally rethink their approaches to payments optimization to ensure that their newer digital solutions can coexist with long-established methods like paper checks.