12 articles General

Dear Canadian businesses: It’s time to stop using cheques

Void cheque

Many of us Canadians stubbornly cling to cheques: we write cheques, we receive cheques, we deposit cheques. It’s time to stop. They’re expensive, insecure, and inefficient.

The status quo is comfortable

Many businesses know that it’s important to find ways to optimize operations and decrease costs. Studies show a significant decrease in business costs resulting from the switch from cheques to electronic forms of payment.

Unfortunately, change can be a big hurdle. As a Chartered Professional Accountant, sometimes when I make a recommendation to a client, such as moving to a different type of payment, I have to convince not just the owner of a business, but in the case of a larger entity or a charitable organization, I have to speak to several people on the board of directors, most of whom are quite reluctant to consider something new.

If you’re a cautious person, especially when it comes to payment processing, you’re not alone.

But don’t get stuck in the past

I was once speaking to a potential client. This client’s bookkeeper had been with her for a couple of decades, but the bookkeeper was about to retire.

As we spoke, she revealed to me that she does not trust technology and in fact she refuses to even use online banking. No matter how much I tried to explain that the only one in charge of her account is herself, she still preferred going to the branch for each transaction, often daily. She explained that the branch was close to home and she didn’t mind.

I did not take on this client. I just felt it would be too difficult to justify my rate in such an inefficient operation. If your business gets stuck in the past, you’ll have significantly fewer choices in terms of qualified people you can hire.

Cheques are not secure

Have you run into any of the following scenarios yet?

  • The bank makes a mistake and allows a fraudulent cheque to be processed.
  • The cheque does not reach the correct destination in the mail.
  • The recipient makes an error, such as misplacing the cheque.

On the more innocent side, a vendor can deposit a cheque but later forget, or they can make a mistake when reconciling bank statements, and then complain that they didn’t receive payment. Depending on how much time has elapsed, it can take time and resources to resolve the situation — as a busy business owner, what do you want to focus your time on?

Some more sinister things happen too, such as cases of actual fraud. Maybe it hasn’t happened to you, but it’s not as rare as you think. Below are two examples from my own experience.

A client issued a cheque and it cleared. No issue on our side. However, a while later the vendor complained about not receiving payment. It turns out they never received the cheque in the mail. It’s not very difficult for a fraudster to intercept mail and deposit it in a similarly named company, which is likely what happened based on the bank investigation that followed. The investigation took several weeks.

Another client had a cheque clear… but it wasn’t a cheque my client ever issued. Based on the investigation, it looked like the fraudster engaged in some photocopy magic and created a whole bunch of fake cheques with different account numbers and made deposits in various banks to see if anything cleared. In fact, when we saw a copy of the cheque it didn’t even have my client’s name on it.

The good news: because the second client had fully transitioned to using electronic payments, as soon as we logged in to online banking, the cheque was so noticeable it was practically yelling at us to do something. We immediately contacted the bank and got the funds back. The next day, the same thing happened! Clearly the fraudster caught on that ours was a real bank account. We again got the funds back, and unfortunately had to close this account. Transitioning bank accounts was relatively smooth because we had no cheques in transit.

The hard costs of cheques

A new business cheque book can cost anywhere from $100 to $300. A company with multiple bank accounts (such as CAD and USD), or a company that needs its logo on cheques, will sometimes spend more. Let’s say each paper cheque costs $1. I am not including the cost of mistakes or void cheques.

Then, if it’s impossible to hand someone a cheque in person, it needs to be mailed. Let’s say that’s $1 in postage. So, at a minimum, a company spends $2 just to get a cheque out the door.

As we know, banks charge fees. Some banks charge a fee for each cheque that clears. If you want to avoid this you might have to maintain a minimum balance or change to a different fee tier. And what about correcting for errors? A stop payment can easily cost $10 each. Each cheque can end up costing $3-$4.

Paper paper everywhere

If a business is organized, the owner takes the cheque stub, staples it to the original invoice, and neatly files it. Or maybe in your company, you pay someone else to do it. Some companies have very few payments, so it’s not a big deal. But some have a lot.

How much paper do you store in your office or in a storage space? How easy is it to find later? Is your paper secure and protected? Could the time and money managing paper be spent better elsewhere?

The physical can tie you down

As I write this at the beginning of summer 2020, when Canada is experiencing various shut downs related to COVID-19, I sometimes wonder about that potential client that visits her bank branch every day. I can only hope that her business is able to operate and that she’s safe.

How are you managing your business during the pandemic? Do you physically go to your office or bank? Does the bookkeeper drop off a stack of cheques for you to sign on your porch, in a plastic bag to protect them from the elements?

You’re not all in the office anymore

Imagine this: a charity needs to pay a supplier. The bookkeeper issues a cheque. Each cheque requires signatures from any two of the signatories on the board. They all live in completely different parts of the city.

Usually, an employee (or sometimes, a volunteer) has to get to each signatory and then bring the cheques back for mailing. Or maybe the charity requires that you come in to sign cheques on location. Even during normal times, this can be a bit of a pain.

Now, imagine you’re a signatory on the board and there is a pandemic. You are worried because you have an immuno-compromised family member. But you need to sign those cheques immediately because the charity is in financial trouble and it’s organizing an emergency online fundraiser and the web developer wants to be paid right now or else it won’t happen.

There are alternatives!

I hope I have convinced you that it’s time to start looking at other options. You probably know of, or have even used, some forms of electronic payment. But how can they be used by your business in an efficient manner?

There are many alternatives to cheques, including Interac e-Transfers, EFT/ACH, wires, and companies that specialize in accounts payable payment processing. In subsequent articles, I will explain these in more detail!

About the author

I am a Chartered Professional Accountant working somewhere in Canada. I provide controllership, training, and consulting services to small and medium sized businesses. I also work with non-profit organizations. I write only about my experiences in the business world and I am not selling or advertising any company or service, including my own. Audrey Silva is my pen name.

How to save money when visiting the USA: a seasoned traveller’s pro tips

US dollars on a map

As per the World Tourism organization, Canadians rank 7th worldwide when it comes to spending on travelling. Canadians spend around 1,000 USD per capita on international travel every year. The most favourite destination for Canadians is our southern neighbour: The United States of America.

Every year, around 20 million Canadians travel to the US. I’ve travelled to the U.S from Canada dozens of times. Each time I go I find new ways to save money. If you are looking for ways to stretch a dollar while visiting the US, keep reading. We are going to discuss several ways to do that.

1. Credit cards with no forex fees

No matter how economically you travel, travelling is expensive, even if it is just across the border.
Forex fees are in my opinion one of the biggest “hidden” costs that credit card companies have. Although you can see the fees on your statements if you look closely, I like to say that the forex fees are hidden because many people are not even aware that it exists.

If you’re not aware, most Canadian credit cards charge at least a 2.5% foreign exchange fee for every purchase you make in the U.S, which can add up over your trip.

Whether you are shopping at local stores or trying out local cuisines, you should swipe a card that doesn’t charge foreign currency exchange transaction fees.

Check out these credit cards with no forex fees, especially if your stay spans more than a week.

2. Find alternatives to withdrawing cash or using debit cards

Withdrawing cash from ATMs and using traditional debit cards in a foreign land can also cost you a lot in service charges that won’t add any value to your trip. So, how about having an alternative to that?

Online-only banking has become all the rage in the last couple of years. You can also hop on the bandwagon to save money while visiting the US. You can try EQ Bank as an alternative to your conventional banking cards. It is entirely free to open an account in EQ, which is an online-only bank with no hidden terms and conditions.

EQ Bank has partnered with TransferWise, and you are able to send money to an American account at a much better exchange rate than withdrawing cash at a regular ATM. If you have a trusted friend or relative with a U.S bank account that you will be meeting up while you’re down there, consider using this service to get a cheaper way of withdrawing your cash.

3. Make calls to home the new way

Gone are the days when you would use an expensive landline to call home from other countries. Similarly, the days of international mobile calls also seem behind us, thanks to fast-speed mobile internet. If you are determined to save every single cent while visiting the US, avoid buying international roaming plans.

Instead, make voice and video calls through WhatsApp or Facebook Messenger, and other chat apps while using Wi-Fi internet and data plans. It will certainly cost you less than international roaming charges, especially if you are staying for longer and making lots of calls back home.

There is a free to download phone app called TextNow that I use while on my travels. It lets you have a free Canadian or American phone number that works over Wi-Fi. I’ve used it in my travels around the world with no problems.

4. Use red-eye flights

If your US visit doesn’t involve tightly scheduled work meetings or other emergencies, you should consider flying red-eye. These flights have obscure flight times that are less in demand. They usually take off and land in a 9:00 pm-6:00 am window.

If you are having a lot of interstate travelling in the US, red-eye flights can save hundreds of dollars on your entire trip.

5. Ditch expensive hotel rooms

Airbnb has become the torchbearer of economical travelling in the last couple of years. It has been estimated that renting out an entire apartment on Airbnb is 21% cheaper than booking a single hotel room. If you haven’t used it so far, give it a try on your upcoming US trip.

But if you are a conventionalist and want to stick to a hotel room (or need what are often more flexible cancellation policies), ask yourself these questions before booking one.

  • Do you need a room with a good view?
  • Do you need that extra lounge space?
  • Are you going to use the fitness room, pool, and other premium amenities?

If your visit involves a lot of sightseeing and other outdoor activities, you will only use your hotel room to sleep. So, look for the cheapest rooms that may not offer those superfluous features and amenities but can provide respite by saving you some money.

Tips to save for long-term stays

If your US visit consists of a couple of weeks or longer, you have to consider some other factors. Here is the list of things that you should do before and while on your long-term stay in the states.

1. Know your financial risks in advance

Before finalizing your trip and flying off, take a look at your financial well-being. See how much you have in savings. Take a look at your credit. Make sure that your current financial state allows you to stay for long. Even if it is a work-related trip, you must know your financial vulnerabilities and strengths in advance. Having this information will help you prevent any unpleasant scenario from springing up in the middle of the visit.

2. Track your spending

Money-tracking is crucial when you visit a foreign country; however, it is easier said than done when your visit is longer than a couple of days. On long-term visits, people remain diligent about their money-spending in the beginning. However, when days turn into weeks, they lose track.

You can get around this issue by using a money-tracking app. These apps are your virtual assistant in budgeting, money management, and tracking spending. By using a money-tracking app the right way, you can save hundreds of dollars on a long-term stay.

3. Stay in the peripheral

Staying even at a cheap place in the middle of the city can cost you a fortune when you check-in for weeks. Try to find an accommodation in the peripheral of the city you visit. You can find apartments and rooms on Airbnb in the suburbs of your destination cities.

4. Start cooking

Eating out for, say, 25 days is neither good for your stomach nor your wallet. Make sure your lodging has a kitchen with a cooking space where you can cook some of your meals. You can cut down your dining cost more than half by doing that.

Conclusion

Using the tips discussed here, you can save hundreds of dollars or even more on a long trip to the US. You can also read up on other ways you can save money in Canada. The great thing about these measures is that they let you save money without making any compromise on the overall experience of travelling.

Author Bio – Christopher Liew is the creator of Wealthawesome.com, where he shares money tips and guides for his readers. He’s a CFA Charterholder who has been featured on Yahoo Finance, MSN Money, and The Motley Fool. Read about how he quit his 6-figure job to travel the world.

Credit Verify review: beware of misleading claims and automatic charges

Credit score metre

Credit Verify offers a free Canadian credit score and a $1 credit report. We do not recommend using them.

Automatic monthly charges

During the sign-up process, Credit Verify will ask you for your credit card, noting that it is required in order to verify your identity:

Credit Verify: you must supply your credit card to sign up

The main reason for Credit Verify to get your credit card is in order to charge your credit card a monthly fee (currently $29.95) after 7 days. Compare this against similar Canadian services such as Borrowell, which do not require you to supply your credit card information. You cannot cancel your Credit Verify account online or via email.

You will find a “Cancel” button in the online interface, but it will only lead to a message telling you to send a snail mail or to call them. Their mailing address was previously a US virtual mail service in California, and is now a co-working space in Squamish, BC. If you call their number to cancel, you will be subject to a hold that could be somewhere between 20 minutes and a few hours. You will then be subject to a spiel on the merits of the service, including the ability to correct errors in your credit report, and the reward that they give you each month. However, you will be able to cancel your account.

Credit Verify will not refund a charge they have already made on your credit card.

$25 “reward” each month

Credit Verify advertises the following as a feature of your account:

“You’ll receive $25 in Reward Dollars EACH month you’re a Credit Verify Premium member. Use your rewards however you’d like. Save on popular brands like Kate Spade, Michael Kors, Nike, Lacoste, or Under Armour. Get access to great local deals at the salon, dry-cleaning, car washes, movie tickets or golfing. Or you can save at popular restaurants like TGI Friday’s, Dunkin’ Donuts, McDonald’s, Subway and thousands more.”

The monthly $25 reward they promote is no better than coupons you might get for free in the mail.

Credit Verify free drink coupon

For example, buy a sandwich and drink and get another sandwich and drink free. Or, get a free drink if you purchase a burger, except you had to use your reward to get the coupon in the first place — and you still have to purchase the burger. We tested some hotel bookings through their travel discounts area, and found their prices to be more expensive than booking through the hotel’s own website.

Professional web presence?

Credit Verify is owned by a US company Credique LLC, whose mailing address is the same virtual mail service that used to be posted on Credit Verify’s website.

There are several typos on Credit Verify’s website, which have been there for months:

Credit Verify: typo for the word 'retrieve'

Credit Verify: typo for the word 'restaurant'

It is also telling that the social media icons in the footer of their website do not have links attached to them.

Other reviews

Be careful if you read a positive review of Credit Verify — scrutinize whether you can tell if the reviewer has actually used the service or is an affiliate of the service (and thus has affiliate links in their review).

Here are some links to other reviews of Credit Verify:

Beyond the rate: Applying for overdraft protection at Tangerine Bank

Overdraft protection at Tangerine

If you’ve ever been hit with an NSF (non-sufficient funds) fee, you know that it’s costly and inconvenient. With overdraft or coverdraft protection, you can avoid such fees, often for free. Here’s how to set up overdraft protection at Tangerine Bank.

You get charged an NSF fee if there is a debit against your account (such as someone cashing a cheque you wrote) and you do not have enough money in your account to cover the debit. By default, your account is not allowed to be “overdrawn” — in other words, it cannot have a negative balance. Tangerine’s NSF fee is $40. Not only are you charged the fee, but your cheque bounces and you’ll have to re-do the transaction (such as issuing a new cheque) when you have enough money in your account again. You might also get charged another fee by the recipient to cover their inconvenience.

Overdraft protection allows your account to go into a negative balance (up to a certain limit). At Tangerine, you must apply to have this protection enabled. Overdraft protection at Tangerine is free if you do not use it at all, or when you use it, if you transfer enough money into the account by 9:00pm Pacific time / 12:00am Eastern time on the night that your account is overdrawn. Otherwise, it costs $5 in each month that you use it (no matter how many times you use it in a month), plus 19% annual interest until the overdraft amount is paid back. Tangerine will e-mail you whenever you’ve overdrawn your account.

Setting up overdraft protection at Tangerine Bank

First, in your online interface, click the “Overdraft” link on your chequing account:

Step 1: Click the Overdraft link

Then, click the “Apply” button:

Step 2: Click the Apply button

Then, agree to the terms:

Step 3: Agree to the terms

Finally, fill in the application form, which asks for your employment information as well as other personal information:

Step 4a: Enter your employment information

Step 4b: Enter more personal finance information

In some cases, you’re done and are approved immediately. Note that it does a credit bureau check and you might get denied.

How to avoid overdraft fees

If you have enough money in your Tangerine savings account, you can simply transfer the money instantly to the chequing account the same day that an overdraft occurs. Otherwise, if you have enough money elsewhere, consider sending yourself an Interac e-Transfer from another financial institution, since the money transfers close to instantly, allowing for what is usually less than a 30 minute delay between when you send the Interac e-Transfer and when you receive an e-mail or phone link to deposit the money. Many financial institutions offer free Interac e-Transfers on no-fee accounts, including Alterna Bank, EQ Bank, and Motive Financial. (Credit to forum user Adam1 for the idea!)

Not a client of Tangerine Bank? Other financial institutions offer similar overdraft features, including “coverdraft” from Alterna Bank, which triggers an automatic, internal transfer of money between your Alterna Bank accounts whenever one of them is overdrawn.

2019 Canadian personal income tax filing survey results

The results are in! For almost 3 weeks in April 2019, HighInterestSavings.ca ran an online survey of how 201 people file their personal income taxes in Canada.

Have you filed your taxes yet?

15% of respondents wait until the last week in April to file their taxes. 1.5% file in February, while another 1.5% file in May or June. Naturally, the bulk of people file in March (36%) or April (61%). You are average if you file on April 4, whereas the median is roughly the same on April 5.

Who files your taxes?

81% of respondents do their taxes themselves, and of that number, 68% of them believe their tax return is “simple”. 14% of respondents use a tax professional, and of them, 41% rate their tax return as “simple” while the other 59% rate their tax return as “complex”. If you have a family member who does your taxes for free, count yourself as the lucky 4%, or feel guilty that you’re not the 1/201 respondents who said they pay a family member.

How much do you pay to do your taxes?

48% of respondents pay nothing at all, either to someone else or for software. People who pay someone else average $275, although this drops to just under $100 for a self-rated “simple” return. If people pay for software, including donations, the average cost is $26.50.

Software: the Big 4

For those who do their own taxes, 8% of people either eschew software altogether or use only spreadsheets. For the 92% of people who do use software, the vast majority of them (92% of the 92%) use one of StudioTax, TurboTax, SimpleTax, or UFile. The full breakdown of software from our survey is as follows:

  • StudioTax: 27.7%
  • TurboTax: 25.2%
  • SimpleTax: 20.6%
  • UFile: 18.1%
  • GenuTax: 2.6%
  • H&R Block: 1.9%
  • FutureTax: 0.6%
  • myTaxExpress: 0.6%
  • ImpôtExpert: 0.6%
  • TaxFreeway: 0.6%
  • ProFile: 0.6%
  • TaxTron: 0.6%

What are some key features in personal income tax return software? 57% of respondents mentioned that ease of use is important, and to 44% of respondents, free or low cost is important. 15% say they use a given piece of software simply of habit, 5% mention NETFILE as a reason for their choice, and 4% cite security as a key feature.

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