Why This Old-School Payment Method Still Dominates Small Business — and How It Gives Owners an Edge

It may seem hard to believe, but in 2026, most small business owners still use paper checks. 

The research shows this. According to a 2024 study from the Atlanta Federal Reserve, as much as 83% of small firms — those with up to $10 million in annual revenues — use paper checks. Another study by an outside payment processing firm found similar (75%) results. And Mineral Tree, a global payments processing company, said that in just the past 12 months, 57% of businesses paid more than one-quarter of their vendors via check. 

My own experience corroborates this. I visit and talk to countless small business owners every year. And while many rely on electronic payment for certain vendors, most are still doing their check runs the way they’ve been doing them for years — even decades.  You would think that, as younger generations take over, things would change? Nope.

How can so many business owners still be using paper checks in this modern day?  Is this ignorance? No, just a good business practice.

It’s not hard to understand. There are obvious reasons to stick with paper checks. For example, there are both the initial and longer-term service costs, as well as the short-term disruption of moving to an all-electronic payment system compared to the return-on-investment for not doing so. Many business owners don’t have the internal resources to implement such a project. Others don’t want to rock the boat with their suppliers. And then there’s simple demographics: the majority of small businesses are run by older business owners — those over the age of 50 — that are not only set in their ways but not anxious to turn things upside down to fix something that for them isn’t really broken.

But as good as these reasons are, there are even better reasons why so many small business owners are sticking with paper checks.

It’s actually better security

Although the Atlanta Fed’s study said that using paper checks comes with a more significant risk and occurrence of fraud, I’ve found that those risks can be easily mitigated, and in fact are mitigated by some of my smarter, more financially-aware clients.

A good system of internal controls ensures that all checks are locked in a safe and only released from custody when a check run is made. Even then, good financial managers keep a strict watch on their check numbers.

Checks then go through a process of approval — manually matched to invoices and then subject to two signatures for disbursements over a certain amount. All of this means that by the time a check is finally put in the mail, it’s been compared to source documents, reviewed, signed and verified by multiple people in an organization, ensuring there have been numerous sets of eyes laid on the transaction. 

Doing so slows down the disbursement process and gives people time to think about a transaction before the money goes out the door. My clients who pay electronically oftentimes set up their system with fewer of these processes in place, leaving them exposed to incorrect payments.

What about fraud? This is easily defended by a popular service that’s sold by most banks called Positive Pay. This is where a company submits a list of payments (including check numbers, payee, amount and date) to the bank in advance, and the bank only disburses money when the check presented matches that list. Most bankers I know tell me this service works just as well — if not better — with manual checks presented vs. electronic payments submitted that can be subject to potential malware or hackers.

And speaking of malware and hackers, companies that are fully reliant on electronic payments continue to be exposed to data breaches and hacks. Electronic payment systems (ACH, wires, online banking) are major targets for fraud, and many attacks bypass the bank entirely by exploiting people and processes. A 2025 payments fraud study from the Association of Financial Professionals Payments Fraud reported that 79% of organizations experienced actual or attempted payments fraud in 2024. A recent FBI report found that electronic payments are central to losses for both business owners and banks, with cyber-enabled fraud accounting for 83% of all reported financial losses and wire and ACH payments being key channels in successful fraud cases.

Where paper checks really win

All of these are good reasons why a company may want to stick to a manual check processing process. But it’s not the main reason why I see this so often in my clients. That reason is simple: better cash management. Or should I say better float management?

That’s because when you submit a payment to a bank, your money is immediately gone from your account, even when it still takes a few days for it to arrive at the supplier. The bank is making its money, but companies miss out on those extra days of interest, which, depending on how much cash you have, could be significant.

There’s also the control factor.  More than a few business owners I know like to cut checks and put them in a drawer. The money is out of their account as far as their books are concerned. But it hasn’t left the bank yet, which could be very important for companies facing cash flow challenges or if they’re in the middle of a dispute. Once a check is put in the mail, there are still a few business days before it reaches the supplier and then gets cashed. All of these extra days give the business owner the ability to extend their cash flow just a little bit, without incurring interest costs or having to lean on other sources of financing.

All of these reasons explain why so many business owners are still doing their check runs the old-school way: using paper. It may go against common convention. But they’re not wrong.