Most car dealerships accept personal checks without a problem, whether for the down payment or the entire purchase. You might still encounter a few who hesitate, but that number is dwindling by the day. There’s little reason not to; it’s easy to clear a check from an in-state client using an in-state bank, and other scenarios aren’t much of a burden, either.
Automakers, on the other hand, tend to prefer alternative methods of payments. However, using checks allows car industry companies to tap into a new dimension of control over their cash flow.
1. Checks Provide Security
If you’re like most business owners, you’ve gone above and beyond to protect the business’ checking account from unauthorized access. That makes sense, considering checks are most often targeted by scammers, so it likely sounds counterintuitive to think that checks can provide security. However, the paper trail these checks leave behind are an essential component to this level of protection, making them less susceptible to certain forms of cyber attacks than other payment methods.
Remember, criminals can only spend your money if they can access your checks, so leaving them out in the open leaves a severe weak point in any other security measures you’ve set up. Until you’re ready to use those checks, leave them under lock and key. Be sure to train any employees with access to these checks to lock them up before leaving for the night.
Likewise, cross-shredding old checks prevents anyone from using them for fraudulent purposes.
2. Checks Keep Budgets In Check
No matter the industry, good budgeting requires keeping track of your expenses and cash flow. Checks can be a helpful management tool that tracks expenses and provides direct insight into your business’s bottom line.
For one, checks create an undeniable physical record of all transactions. Each one is a tangible representation of a particular expense, making it easier to categorize purchases when reviewing the bank statements. By writing your own checks, you’ll always have a comprehensive view on where your company’s money is going.
3. Checks Support Float Management
Financially speaking, “float” is money in the bank temporarily counted twice due to delays in processing paper checks. A business can use this mechanic to its advantage. Say, for example, that you have a payment due on June 1st for $500. On May 25th, you write and mail in a check for that amount despite having less than that amount in the company account, counting on the fact that the company will not receive or process the check until June 1st. That gives you $500 worth of float during those days, which could make or break your ability to afford a given period of time.
The Bottom Line
While the benefits to using checks in the automotive industry are clear, it’s just as important to be aware of their limitations. For example, there are higher processing costs, slower speeds, and the risk of fraudulent checks. Fortunately, a little preparation can help mitigate these risks and allow the pros to outweigh the cons.
