A paper check costs more than just its supplies and postage. The largest cost that’s not often considered is time. Your team spends time preparing or collecting payments, depositing, tracking down missing checks, and reconciling accounts. These costs are easy to overlook but add up in the long run.
Understanding your total cost per check helps you see where your team spends time and effort, and whether switching more payments to ACH or using remote deposit capture could save money. Here’s how to calculate the real cost of paper checks.
What does a paper check cost?
The Association for Financial Professionals’ 2022 Payments Cost Benchmarking Survey reported a median cost range of $2.01 to $4.00 to issue a paper check and $1.01 to $2.00 to receive one. For ACH payments, the median range was $0.26 to $0.50 per transaction.
These figures are a starting point, and your actual costs depend on your process, bank fees, and staff time. Wages and postage may also have changed since the survey.
Where the costs add up
To understand what checks cost your organization, look at the full process:
- Supplies and postage, including check stock, printing, envelopes, and stamps.
- Staff time spent preparing, collecting, approving, mailing, depositing, and reconciling checks.
- Bank fees for check processing, returned items, and related services.
- Payment problems, such as lost checks, stop payments, reissues, and payment inquiries.
- Fraud prevention, including review time and services such as positive pay, plus any unrecovered losses.
- Delays that cause missed early-payment discounts or extra work applying customer payments.
Even if you haven’t experienced check fraud, the time and money spent preventing it still belong in your calculation.
How to calculate your cost per check
Choose a quarter or year and count the checks you issued or received during that period. Add up the related costs, then divide by the number of checks.
Cost per check = Total check-related costs ÷ Number of checks
For labor, estimate the total hours your team spends handling checks and multiply that by an hourly rate that includes wages and benefits. If exact figures aren’t available, start with a reasonable estimate and refine it over time.
Calculate issued and received checks separately. Mailing a vendor payment involves different work than depositing a customer’s check.
A simple example
Suppose your organization issues 12,000 checks a year. Here is an illustrative breakdown:
| Cost category | Annual cost |
| Supplies and postage | $9,600 |
| Bank fees | $2,400 |
| Staff time | $30,400 |
| Payment problems | $6,000 |
| Fraud controls | $2,560 |
| Missed early-payment discounts | $3,040 |
| Total | $54,000 |
Divide $54,000 by 12,000 checks, and the cost is $4.50 per check. Staff time accounts for more than half of the total.
Converting to ACH:
If 8,400 of those payments moved to ACH at an assumed cost of $0.40 each, you could save around $34,440 a year in costs. That is a simplified estimate, not guaranteed cash savings. Some costs remain even when you send fewer checks, and implementation or service fees may affect the result. Time saved can also free your team to focus on other work.
How to reduce your costs
Start by moving payments to ACH where customers or vendors accept it. For checks you still receive, remote deposit capture lets your team scan and deposit them without a trip to the bank.
Support those changes with appropriate controls. Account validation can help identify incorrect account details before sending ACH payments. Positive pay helps your bank flag checks that don’t match your approved payment information.
After making a change, repeat the calculation to see how your costs and staff workload have changed.
Start with your own numbers
Review one quarter of check activity to find out what your current process costs. You may discover that staff time or payment follow-up matters more than postage.
If you’d like help reviewing your payment process or exploring ACH and remote deposit capture, contact us at iStream today.
