What would happen to your liquidity and working capital if many of the checks you wrote were presented for payment two days sooner? How about if your bank gave you a day's better availability on many deposited checks? What would happen to your defenses against check fraud if your checks cleared as digital images instead of paper documents or if they were converted to ACH debits by the bank where they were deposited?

Despite the fact that most treasury departments have not yet been forced to contend with such challenges, these questions are far from hypothetical. Initiatives that would turn paper checks into electronic payments are coming–slower perhaps than hoped for by those who think it will revolutionize business, but faster than those sitting in corporate treasuries or even banks feel prepared for.

The numbers tell part of the story. Between 1995 and 2001, the volume of checks fell to 41.6 billion from 49.5 billion, according to NACHA–The Electronic Payments Association. Given the strength of the economy during most of those years, the drop is noteworthy. "Banks are definitely seeing the decline and can't really explain it," says Cathy Gregg, a partner at consulting firm Treasury Strategies. She notes that the government has been aggressive in reducing its check volume and to a lesser extent so have companies dealing with consumer transactions. "On the corporate side, however, there is a drop and that can only be from a combination of factors–accounting departments getting more efficient at combining invoices, use of p-cards, to name two," Gregg says.

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