Still using cheques? Why you need to stop

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An aftermarket repair and service shop that still writes cheques makes Hunt Demarest nervous.

The senior accountant who specializes in working with automotive repair shops with Paar, Melis & Associates doesn’t like to see cheques out on the street for any reason unless it absolutely can’t be avoided.

He prefers shops to use credit cards for payments. “Credit cards are very easy. You can also lock it when it’s off-hours,” he told attendees of his session Protecting Your Company at the Midwest Auto Care Alliance Vision Hi-Tech Training and Expo.

Sometimes there are things that need to be paid on delivery and cheques can be used for that. But the shop owner alone should have cheque signing authority. If the shop has multiple locations or leaves someone in charge, the rules need to be clear. For example, Demarest said, any time a cheque is written, send the shop owner a photo with a detailed explanation of how much it was, what it was for and the invoice.

If a shop owner leaves cheques lying around, they can be stolen and money taken out directly from the business’ account. This happened to one of Demarest’s clients. Someone got their hands on the business’ cheques and cashed them. The signatures didn’t match but they got the money anyway. This is especially troublesome when cheques can be e-deposited.

That’s not to say issues can’t arise with credit cards. Company-issued credit cards can lead to employees charging personal purchases. So Demarest recommended issuing cards to select people. The alternative is to have everyone use their personal credit cards and file an expense report with explanations and receipts.

“They actually have to prove what they’re spending on it. And if there’s something on there that they can’t prove, then you say, ‘I can’t pay for it. Now that’s on you, not on me,’” Demarest said.

One recommendation he had was to cancel the company credit card every six or 12 months to stop recurring payments and dues. You may have forgotten to cancel a subscription service or unwittingly signed up for one. This way, payment can’t be taken and if there’s something important that actually has to stay on, that company will find a way to let you know.

“If someone needs my credit card and there’s something I want, they’ll contact me,” Demarest said.

Finally, there’s no reason any business should have a debit card.

“The one thing that there is no legitimate reason any of you guys ever should use is a debit card. There’s no reason,” Demarest said. “If they’ll take a debit card, they’ll take a credit card.”