Check Image Processing for Accountants: Complete 2025 Guide

Bank statements show check number, amount, and date, but never the payee name. This forces accountants to manually retrieve check images to categorize transactions.

For tax preparers and bookkeepers handling business clients, this is a daily friction point. You see “Check #1247 - $3,450.00” cleared the account. Was it rent? A contractor payment? Equipment? The statement won’t tell you. Conto solves this by extracting payee names, amounts, and memo lines from check images automatically.

This guide covers why check images matter for accounting work, which industries create the highest check volumes, and how to process them without burning hours in bank portals.

Check Image Topics

Table of Contents

• The Check Image Problem in Accounting
• Why Accountants Need Check Images
  • Transaction Categorization
  • IRS Substantiation Requirements
  • Client Communication
• Industries Where Check Processing Volume Is Highest
  • Construction
  • Legal and IOLTA
  • Agriculture
  • B2B Payments
• The OCR Accuracy Problem with Handwritten Checks
  • Why Handwriting Breaks OCR
  • CAR/LAR Recognition
  • Image Quality Challenges
• Check Fraud: What Accountants Should Watch For
• How to Get Check Images from Banks
• Automating Check Image Extraction
• FAQs

The Check Image Problem in Accounting

Bank statements were designed for reconciliation, not categorization. They confirm money moved. They don’t explain why.

Despite the shift toward digital payments, 32.1% of B2B transactions still use cash or paper checks in 2025.¹ The latest AFP survey shows B2B check payments have dropped to 26%, down from over 80% in 2004.² But for accountants, even 26% of transactions requiring manual check image lookups adds up to hours of work.

The workflow looks like this: download statement, see check cleared, log into bank portal, navigate to check images, find the right check, read the payee, return to accounting software, enter the category. Repeat 50-200 times per month per client.

Some banks make this easier than others. Some charge extra. Quality varies. The process is inconsistent and always manual.

Why Accountants Need Check Images

Accountants need check images for three reasons: transaction categorization, IRS substantiation for deductions over $75, and answering client questions about past payments.

Transaction Categorization

You can’t code a transaction you don’t understand. A $2,800 check could be rent, insurance, a contractor payment, or equipment. The category matters for financial statements, tax deductions, and budget tracking.

Without the payee name and memo line, you’re either guessing or asking the client. Guessing creates errors. Asking means waiting for responses and following up on unanswered emails.

For write-up work (monthly bookkeeping for clients who don’t use accounting software), check images are often the only way to understand what happened. The bank statement says money left the account. The check image says where it went.

IRS Substantiation Requirements

The IRS requires documentation for business expenses. Check images provide proof of payment: who received the money, how much, and when.

For deductions over $75, the IRS expects records showing the business purpose.³ A cleared check proves payment occurred. The payee name connects the payment to a vendor. The memo line (when filled out) adds context about the expense category.

During an audit, check images become part of the evidence trail. Having them organized and accessible can mean the difference between a smooth review and an extended examination.

Client Communication

“What was check #3847 for?” comes up regularly during tax prep and monthly closings. Clients don’t always remember transactions from months ago.

With check images on hand, you answer immediately. The payee was “ABC Roofing” and the memo says “deposit - new roof.” Question answered, return completed, invoice sent.

Without check images, you send an email, wait, follow up, and maybe get an answer that says “I think it was for the roof?” That uncertainty creates work and erodes client confidence.

Industries Where Check Processing Volume Is Highest

Construction (76% subcontractor payments by check), legal (IOLTA requirements), agriculture (rural banking), and B2B (26% of transactions) generate the highest check volumes for accountants.

Construction

76% of subcontractors receive payments via paper checks.⁴ Construction creates a payment chain: owner pays general contractor, GC pays subs, subs pay suppliers. Checks document each link in that chain.

The construction industry lost $273 billion to slow payments in 2023.⁵ Average time to get paid: 83 days. Checks persist because they provide lien documentation, allow payment holds, and let general contractors manage cash flow across projects.

For accountants serving contractors, this means bank statements full of checks. Progress payments coming in, subcontractor payments going out, material purchases, equipment rentals. Each needs categorization. Few have clear memo lines.

Legal and IOLTA

Interest on Lawyer Trust Accounts (IOLTA) require specific handling. These accounts hold client funds, and state bars mandate strict recordkeeping.

42 states have mandatory IOLTA programs.⁶ Third-party processing fees can’t be paid from client funds, so firms use checks to avoid transaction fees on disbursements. Settlement payments, retainer returns, and court-ordered payments flow through checks.

For bookkeepers serving law firms, check images are essential for trust account reconciliation. Every dollar must tie to a client matter. The check payee and memo line provide that connection. Missing or unclear check images can trigger compliance issues during bar audits.

Agriculture

38.1% of farm loans ($199 billion) come from banks, with 1,442 banks specializing in agricultural lending.⁷ Rural customers visit bank tellers at nearly twice the rate of urban customers.⁸

Limited broadband, traditional banking relationships, and government payment structures keep checks common in agricultural areas. Farm income from government programs exceeded $45 billion in 2020.⁹

Accountants serving agricultural clients deal with seasonal income, equipment purchases, land payments, and operating loans. Check images document these complex transactions across planting and harvest cycles.

B2B Payments

The 2025 AFP survey shows B2B check payments have dropped to 26%.² But 86% of global companies still pay some invoices with checks, and 92% accept checks as payment.¹⁰

Small businesses get paid an average of 9 days late.¹¹ Only 5% of midsize businesses have fully automated their accounts payable and receivable.¹² The cost is high: $4-$20 per check to issue versus roughly $0.30 for digital payments.¹³

77% of businesses that still use checks plan to transition to digital payments within 1-3 years.¹ Until they do, accountants handle the check volume that remains.

The OCR Accuracy Problem with Handwritten Checks

OCR accuracy drops from 99% on printed text to 64% on cursive handwriting, making automated extraction of handwritten payee names unreliable without human verification.¹⁴

Why Handwriting Breaks OCR

The payee line on a check is almost always handwritten. So is the memo line. Each person writes differently. Letter formation, spacing, slant, and connections vary. A “4” that looks like a “9” to one algorithm looks like a “7” to another.

In benchmarks using hard-to-read handwritten samples, LLMs and traditional OCR averaged 64% accuracy.¹⁴ GPT-4o and Amazon Textract led the pack, but even the best performers struggle with cursive.

For legible handwriting in controlled conditions, accuracy reaches 90-95%.¹⁵ But bank check images rarely offer controlled conditions.

CAR/LAR Recognition

CAR (Courtesy Amount Recognition) reads the numerical amount in the box. LAR (Legal Amount Recognition) reads the written-out amount on the line. Banks use both to verify checks match.

This dual-amount verification has been called “the Holy Grail of OCR.”¹⁶ Specialized engines like Orbograph and Mitek focus on check amount recognition because general-purpose OCR struggles with it.

For accountants, the amount usually matches the bank statement. The challenge is the payee and memo, which have no numerical equivalent to cross-verify.

Image Quality Challenges

Check images from banks vary in quality. Mobile deposits captured by phone cameras depend on lighting and angle. Scanned checks depend on scanner settings. Images get compressed for storage.

35% of remote deposit capture deposits require manual review due to image quality problems.¹⁷ Ink stains, blur, and shadows affect recognition accuracy.

For accountants downloading check images from client bank portals, you get whatever the bank provides. Quality varies by institution and account type.

Check Fraud: What Accountants Should Watch For

With 63% of organizations reporting check fraud in 2024 and losses projected above $24 billion, accountants reviewing check images can catch altered checks before they compound into larger losses.¹⁸

Check washing is the primary method. Chemicals remove the ink, allowing fraudsters to change the payee and amount. Losses from check washing exceed $815 million annually.¹⁹

Mail theft drives much of this fraud. Complaints rose from 60,000 in 2018 to over 250,000 in 2023.²⁰ Over 8,000 USPS arrow keys have been stolen or gone missing since 2018, giving criminals access to collection boxes.²⁰

Red flags in check images include:

• Inconsistent ink colors (payee in different ink than other fields)
• Unusual spacing or alignment in the payee line
• Smudged or blurred areas in specific fields
• Payee names that don’t match expected vendors

For accountants doing bookkeeping, catching these anomalies during routine work can prevent larger losses. A check that looks wrong probably is wrong.

Black gel pens resist chemical washing better than ballpoint pens.²¹ Worth mentioning to clients who write checks for large amounts.

How to Get Check Images from Banks

Banks retain check images for 7 years under federal requirements, accessible through online banking portals, though policies on fees and image quality vary by institution.

The Check 21 Act of 2004 enabled electronic check processing but doesn’t mandate specific retention periods.²² State laws and bank policies fill that gap. New York, for example, requires six-year retention.²³

Online Banking: Most banks show check images in transaction details. Click the check number, view the image. Quality and accessibility vary by bank.

Monthly Statements with Images: Some banks include check images in statements. Others charge $2-3/month extra for this feature.

Image Requests: For older checks outside the standard online window, banks may require formal requests. Response times range from same-day to several weeks.

Business Banking Portals: Higher-tier business accounts often have better image access, bulk download options, and longer retention periods visible online.

For accountants managing multiple clients across multiple banks, this fragmentation creates work. Each portal has different navigation, image formats, and download limits.

Automating Check Image Extraction

Conto automates check image extraction by pulling payee names, amounts, and memo lines from scanned checks, shifting accountant time from manual data entry to verification.

Manual check processing follows a predictable pattern:

1. Download bank statement
2. Identify cleared checks without context
3. Log into bank portal
4. Find each check image
5. Read payee and memo
6. Return to accounting software
7. Enter categorization
8. Repeat

At 2-3 minutes per check, processing 100 checks takes 3-5 hours. For clients writing 200+ checks monthly, this becomes a substantial portion of the engagement.

Automation changes this:

1. Upload bank statement and check images
2. System extracts payee, amount, memo from each check
3. Review extracted data against original images
4. Export categorized transactions

The key difference: time shifts from typing to verification. You confirm extracted data instead of creating it. Verification is faster and catches errors that manual entry would miss.

For practices doing write-up work across multiple clients, automation turns check processing from a bottleneck into a routine step. For broader strategies on automating financial document workflows, see our data extraction guide.

FAQs

Why don’t bank statements show check payees?

Bank statements were designed for account reconciliation, not expense categorization. They confirm money moved (amount, date, check number) but don’t extract payee information from the check image. Historically, extracting and storing payee names was cost-prohibitive for banks.

How long do banks keep check images?

Banks typically retain check images for 7 years, though access policies vary. Online banking usually shows recent checks (12-24 months). Older images may require formal requests. The Check 21 Act doesn’t mandate specific retention periods, but state laws often do.

Why is handwritten check OCR so inaccurate?

OCR achieves 99%+ accuracy on printed text but only 64% on cursive handwriting in benchmarks.¹⁴ Handwriting varies by person. Letter formation, spacing, and style create ambiguity that algorithms struggle to resolve consistently.

What information can be extracted from a check image?

Check images contain: payee name, numerical amount, written amount, date, check number, memo line, signature, bank routing and account numbers, and endorsement information. Not all fields are always legible or filled out.

Which industries still use checks the most?

Construction (76% of subcontractor payments), legal (IOLTA requirements), agriculture (rural banking infrastructure), and B2B payments (26% of transactions in 2025) generate the highest check volumes.

Can automation handle handwritten checks?

Automation can extract handwritten data, but accuracy is lower than printed text. The practical approach combines automated extraction with human verification for low-confidence fields. Review time is still much faster than full manual entry.

How do I spot an altered check?

Red flags include: inconsistent ink colors between fields, unusual spacing or alignment, smudged areas, and payee names that don’t match expected vendors. Check washing typically leaves subtle visual evidence that trained eyes can catch.

Start Processing Check Images Faster

Check images contain the data accountants need. The challenge is extracting it without spending hours in bank portals.

For practices serving construction, legal, agricultural, or B2B clients, check processing volume makes automation worth evaluating. The time savings compound across clients and months.

Try Conto with your check-heavy client data. Upload scanned checks or bank PDFs and see extracted payee names, amounts, and memo lines in seconds.