There are a lot of ways for subscription-based businesses to collect on their receivables. By sheer volume, credit and debit cards account for nearly two-thirds of all non-cash transactions in the United States.

It makes sense that credit cards are the preferred payment method for businesses and customers alike. It’s fast, convenient, and secure. But there are many card alternatives such as ACH, eCheck, wire transfers, crypto currencies, and of course, good old fashion paper checks.

Many customers still prefer to pay for subscriptions with checks, especially when dealing with larger corporations’ finance departments. Any business that deals with enterprise customers, thin margin products, or moving money around on behalf of clients is going to get their fair share of checks.

There is no shortage of solutions for processing physical checks. From mobile apps to P.O. boxes and couriers, below are five common ways to make accepting checks a little less painful. We’ve even included a breakdown of the pros and cons for each, so you can easily compare and determine which is best for your own recurring billing business.

1. Mobile Check Deposit

Mobile check deposit is a secure way to deposit checks using a native app on your smartphone. If you’re with one of the major U.S. banks then you’re probably familiar with this method at least from personal use. It’s as simple as taking a picture with your phone, and the funds are typically available within a couple days of depositing.

If your subscription business gets just a few, low value checks each month this is probably the best solution. If you get higher check volume, higher value checks, or also need to reconcile check deposits with customer invoices then mobile check deposit is probably not going to be the most scalable option.

What’s good:

  • Simple to use
  • Quick funds availability

What’s not good:

  • Low limits on deposits (per deposit, per week, and per month)
  • No payment context (e.g. attachments)
  • Manual accounting and transaction recording

2. Remote Check Deposit

Many businesses that get a lot of checks, or high-value checks (as you would from enterprise customers) subscribe to remote deposit capture programs with retail banks. The bank will lease your subscription business a scanner similar to what you might see a teller use, and you can then scan checks directly from your office in bulk.

You can typically deposit checks late in the day for next-day processing and there is generally no limit to the amount you can deposit. If your business gets a high volume of checks, but not enough to make a bank lockbox cost effective, this solution could work really well.

There’s still a lot of manual work that goes into the deposit, and of course hardware and software to maintain, but it’s a relatively scalable solution for check deposit.

What’s good:

  • No deposit limits and later cutoff times
  • Bulk check scanning is easy

What’s not good:

  • Hardware and software to lease and maintain
  • Locked in to a specific bank
  • No payment context (e.g. attachments)
  • Manual accounting and transaction recording

3. Lockbox Banking

Other recurring revenue businesses hire their bank to retrieve and process paper check payments by signing up for lockbox service. Customers send payments to a dedicated P.O. Box, then a courier picks up the payments and takes them to a processing center.

There are essentially two types of lockboxes: wholesale and retail. Wholesale is generally for low volume, high value checks; while retail is usually for high check volume.

Lockboxes offer a lot of benefits to, including the ability to convert paper checks to ACH and speed up the funds availability dramatically.

What’s good:

  • Options for high-value and high-volume checks
  • Faster funds availability (extra cost)
  • Scans of any attachments for payment context (extra cost)

What’s not good:

  • It’s expensive
  • Minimum account balance, contract, and maintenance fees
  • Digital scan and physical copy retention costs extra
  • Support for accounting software varies dramatically as do cloud storage syncing options

4. eCheck

eCheck is very popular as it removes the physical check altogether and offers a digital solution. Check payments can be initiated both by the subscription business with authorization from a customer via a billing portal, or by the customer directly via a third-party service. It’s basically a digital version of a paper check and has the potential to include additional payment context just like a physical check would.

They use the same network as ACH transactions, but may be cheaper to accept as merchant processors often charge a simple, low flat fee to accept.

What’s good:

  • Cheap processing fees
  • Potential to include payment context

What’s not good:

  • You have to convince customers to pay by eCheck via an online billing portal, or send you eChecks from a third-party service
  • Doesn’t easily accommodate recording transactions in your accounting software
  • You still have to figure out where and how to store all the digital information

5. Full Service Deposit-by-Mail

There are a few services out there that lean on the deposit-by-mail infrastructure that nearly all banks support. Generally, these services will receive checks on your behalf much like a lockbox service from a bank. The main difference here is that instead of relying on the bank to manage this, you’re relying on a Commercial Mail Receiving Agent.

A great example of this is the CheckStream service from Earth Class Mail. Just like a lockbox, they’ll receive your checks, complete endorsements and deposits slips. At that point, the deposit will be packaged up and overnight mailed to any supported bank.

There are a lot of advantages for subscription businesses to deposit-by-mail services: fast funds availability, no deposit limits, no credit checks, and no long term contracts are just a few.

What’s good:

  • No contract, hardware, or maintenance
  • No credit checks or minimum balances
  • Works with almost any bank, and doesn’t lock you into a bank
  • Lots of value added features like accounting software integrations and developer APIs

What’s not good:

  • No option to convert physical checks to ACH
  • Some banks aren’t supported

Ultimately, most businesses just want to clear their accounts receivable as quickly and easily as possible. There’s no shortage of options when it comes to managing physical check payments, so it’s just a matter of finding the right solution that’s best suited for your business.

Shameless Plug

When using Chargify to manage your subscription billing, you can control the desired payment method for your customers. Even when automatic payments via card is the default payment method, invoice billing is always an option to meet the needs of certain customers and their ability to pay. When customers on invoice billing pay via check, the external payment can be manually recorded to ensure your recurring revenue analytics are accurate and up-to-date for all accounts receivable.