Which Industries Still Rely on Paper Checks? 2025 Analysis

Construction, legal, agriculture, and B2B payments remain the four industries where paper checks dominate in 2025. Construction leads with 76% of subcontractors receiving payments by check.¹ Legal firms use checks for IOLTA trust account compliance. Agriculture relies on checks due to rural banking infrastructure. And 40% of all B2B transactions still flow through paper checks.²

For accountants serving clients in these industries, check-heavy workflows create categorization challenges. Bank statements show check numbers and amounts but not payees, forcing manual lookups during tax season. Conto automates the extraction of payee information from check images, reducing the time accountants spend hunting down who their clients paid.

Table of Contents

• Why Paper Checks Haven’t Disappeared
• Construction: The Most Check-Dependent Industry
  • The Slow Payment Problem
  • Why Construction Sticks with Checks
• Legal Industry: IOLTA Trust Account Requirements
  • What IOLTA Compliance Requires
  • Why Electronic Payments Create Problems
• Agriculture and Rural Banking
• B2B Payments: The $25 Trillion Check Market
• Real Estate and Property Management
• Healthcare: Declining but Present
• What This Means for Accountants

Why Paper Checks Haven’t Disappeared

Paper checks persist because they offer float management, audit trails, and work in situations where electronic payments create compliance or cost problems.

Despite predictions of their demise, 75% of companies still use paper checks in 2025.³ The Federal Reserve reports only 3% of consumer payments use checks, but that statistic obscures where checks concentrate: business payments, regulated industries, and high-value transactions.⁴

Checks solve specific problems that electronic alternatives don’t address well:

Float management: A check written today might not clear for 3-5 days. For businesses managing cash flow, this timing gap provides breathing room. ACH and wire transfers hit accounts immediately.

No transaction fees: Sending a check costs postage. Accepting credit cards costs 2-3% of the transaction. For a $50,000 contractor payment, that difference matters.

Paper trail: Canceled checks provide physical proof of payment with signatures. Digital payment confirmations exist, but some industries trust paper more.

Vendor requirements: Many suppliers, especially smaller contractors and service providers, prefer or require check payments. They may not have payment terminals or ACH capabilities.

The next sections break down where checks concentrate and why each industry holds onto them.

Construction: The Most Check-Dependent Industry

Construction is the most check-dependent industry in the U.S., with 76% of subcontractors receiving payments via paper check and average payment delays of 83 days creating a $280 billion slow-payment problem.¹

The numbers paint a challenging picture for the construction payment chain:

• 76% of subcontractors receive payments by check¹
• 82% of contractors experience payment delays exceeding 30 days (up from 49% in 2022)⁵
• Average wait time to receive payment: 83 days⁶
• 95% of general contractors float payments while awaiting disbursements⁷
• Slow payments cost the industry $280 billion in 2024⁸

The Slow Payment Problem

Construction operates on a payment chain: property owners pay general contractors, who pay subcontractors, who pay suppliers. Each link in the chain waits for the previous one.

A subcontractor completing work in January might not receive payment until April. During that 83-day average wait, they cover payroll, materials, and equipment costs from their own cash flow.

Payment delays increased dramatically from 2022 to 2024. Just 49% of contractors reported 30+ day delays in 2022. By 2024, that rose to 82%.⁵ The industry runs on extended credit, often involuntarily.

Why Construction Sticks with Checks

Construction relies on checks for reasons beyond tradition:

Lien rights documentation: Checks provide physical proof of payment that supports mechanics lien filings. If a subcontractor claims nonpayment, a canceled check with their endorsement is clear evidence.

Partial payments: Construction projects involve draws and progress payments. Writing a check for 40% of a contract phase is simpler than setting up recurring ACH pulls.

Retainage holds: Standard contracts hold back 5-10% of each payment until project completion. Checks make these partial payments straightforward.

Supplier preferences: Many material suppliers operate on net-30 terms paid by check. Changing payment methods requires changing supplier relationships.

For accountants handling construction clients, check volume means more manual categorization work. A general contractor writing 50 checks per month to various subcontractors creates 50 transactions that need payee information from check images that bank statements don’t include.

Legal Industry: IOLTA Trust Account Requirements

Law firms must use IOLTA (Interest on Lawyers’ Trust Accounts) for client funds, and the compliance requirements around these accounts make check payments the standard for many disbursements.

IOLTA programs operate in all 50 states plus D.C.⁹ When attorneys hold client funds (retainers, settlement proceeds, escrow amounts), those funds must go into specific trust accounts with strict handling rules.

What IOLTA Compliance Requires

IOLTA compliance creates documentation requirements that favor check payments:¹⁰

Detailed record-keeping: Each transaction requires a client ledger entry. Check numbers, payees, and amounts must be recorded. The check register serves as a core compliance document.

Separate accounting: Client funds cannot commingle with the firm’s operating funds. Every payment from trust requires clear documentation of what client it came from and why.

Overdraft reporting: If an IOLTA account goes negative or a check bounces, the lawyer must report this to bar disciplinary counsel with an explanation. Banks automatically notify state bars of IOLTA overdrafts.

Audit readiness: Bar associations conduct random trust account audits. Canceled checks and detailed ledgers are standard audit requirements.

Why Electronic Payments Create Problems

Electronic payments from IOLTA accounts face practical hurdles:

Fee restrictions: Processing fees for credit cards or payment platforms cannot be deducted from IOLTA funds. A $10,000 settlement disbursement paid via credit card would cost $200-300 in processing fees. That fee cannot come from client funds, so the firm must absorb it.

Third-party documentation: Wire transfers lack the signature endorsement that checks provide. For settlement disbursements involving multiple parties, checks create clearer proof of delivery.

Bank requirements: Some IOLTA programs require accounts at specific financial institutions with defined interest remittance procedures. These legacy banking relationships often mean legacy payment methods.

Attorneys don’t use checks because they prefer them. They use checks because the compliance framework around client funds makes electronic alternatives complicated or prohibited.

For accountants handling law firm clients, IOLTA reconciliation is critical. Each check payment requires matching to client ledger entries. Check image processing helps verify that disbursements went to the right payees.

Agriculture and Rural Banking

Agriculture relies on paper checks due to rural banking infrastructure limitations and the structure of farm lending, where 38.1% of all farm loans come from traditional banks with in-person relationships.¹¹

Rural areas have different banking patterns than urban markets:

• Rural customers visit bank tellers at nearly 2x the rate of urban/suburban customers¹²
• 4 in 10 rural households visit bank branches 10+ times per year¹²
• Government agricultural payments exceeded $45 billion at peak (2020)¹³

Broadband limitations: Many rural areas lack reliable internet for electronic payment platforms. According to CFPB research, rural communities face challenges accessing digital banking services.¹²

Relationship banking: Farm lending involves long-term banker relationships. Agricultural lenders know their borrowers personally. Checks fit this relationship-driven model.

Seasonal cash flow: Farm income arrives in bursts after harvest or livestock sales. Farmers write checks against this income throughout the year to suppliers, equipment dealers, and seasonal workers.

Government payment distribution: USDA programs historically used paper checks. While electronic options exist, many farmers established their operations around check-based payment flows.

For accountants serving agricultural clients, check volume spikes seasonally. A farm operation might write 10 checks in January and 50 in October. This inconsistency makes automation helpful during peak periods.

B2B Payments: The $25 Trillion Check Market

Approximately 40% of B2B payments in the U.S. still flow through paper checks, representing more than half of the $25 trillion B2B payments market by value.²

Business-to-business check usage remains high despite electronic alternatives:

• 40% of B2B transactions use checks²
• Checks account for over half of B2B payment value (Mastercard data)¹⁴
• Only 5% of midsize businesses have fully automated AP/AR¹⁵
• 51% of companies perform half or more of payment operations manually¹⁵

The persistence of B2B checks comes down to cost and inertia:

Processing cost advantage for large payments: ACH costs pennies per transaction. Wire transfers cost $15-30. Credit card processing costs 2-3%. A check costs postage plus processing labor.

For a $100,000 vendor payment:

• Credit card: $2,000-3,000 in fees
• Check: ~$8-12 in processing costs¹⁶

The math favors checks for high-value B2B transactions.

Accounts payable workflows: Many AP departments built their processes around check runs. Weekly check printing batches fit established workflows. Switching to electronic payments requires changing procedures, training staff, and updating vendor records.

Vendor acceptance: Not all vendors accept ACH. Smaller suppliers may not have electronic payment capabilities. Checks work universally.

Float management: Net-30 terms plus check mailing plus clearing time gives payers an extra week of float compared to same-day ACH. For businesses managing cash flow tightly, that timing matters.

Conto processes bank statements from clients across B2B industries, extracting check payee data to speed up categorization. When a client writes 100 checks per month to various vendors, automated check image extraction saves hours of manual matching.

Real Estate and Property Management

Property management and real estate transactions rely on checks for contractor payments, security deposits, and owner disbursements, though tenant rent payments are shifting toward digital methods.

The real estate sector shows a split pattern:

Rent collection shifting digital: Online rent payments increased 18% year-over-year.¹⁷ Tenants increasingly pay through portals or ACH.

Contractor payments staying paper: The majority of payments to contractors are still made by check, according to Federal Reserve surveys.⁴ Property managers hiring plumbers, electricians, and maintenance workers typically pay by check.

Security deposits: State laws often require security deposits in specific account types. Returning these deposits by check creates a clear paper trail for dispute prevention.

Owner distributions: Property managers paying owners their share of rental income often use checks for documentation purposes.

For accounting firms handling property management clients, the mix of digital and paper creates reconciliation complexity. Rent comes in electronically; repair costs go out by check. Bank statements show both, but check payee details require image extraction.

Healthcare: Declining but Present

Healthcare organizations still accept checks, but patient payment preferences are shifting toward digital methods, with check usage declining faster than in other industries.

Healthcare shows different patterns than the industries above:

• 68% of patients don’t fully pay medical bills¹⁸
• Payment collection drops 62% once patients leave the office¹⁸
• Out-of-pocket healthcare spending: $471.4 billion in 2022, growing 6.6%/year¹⁸

Checks in healthcare typically appear as:

Patient payments by mail: Older patients mailing checks with statement coupons. This pattern declines each year but hasn’t disappeared.

Insurance reimbursements: While EFT is standard for large insurers, some smaller payers and government programs still issue paper checks.

Provider-to-provider payments: Referral arrangements, shared services agreements, and group practice distributions may use checks.

Healthcare check volume is lower than construction or B2B, but accountants serving medical practices still encounter check categorization challenges, particularly for older patient populations or practices with complex payer arrangements.

What This Means for Accountants

Accountants serving clients in check-heavy industries face a specific workflow problem: bank statements show what was paid but not who received it, creating a categorization bottleneck during tax season.

The industries covered above share a pattern. Construction, legal, agriculture, B2B, and real estate all generate high check volumes. For accountants handling these clients:

Tax season check volume spikes: A construction client might write 500+ checks per year. Each one needs categorization. Bank statements show “Check #4521 - $3,200” without payee details. Many construction checks are handwritten, and OCR accuracy drops to 64% on cursive handwriting, adding another layer of complexity. High check volumes also increase fraud exposure, particularly in construction where large payments to unfamiliar subcontractors can mask fraudulent checks.

Client interruptions: Without check images, accountants ask clients: “Who was check #4521 for?” These interruptions slow both parties.

Audit documentation needs: IRS audits of business clients require payment substantiation. Checks to vendors need verifiable payee information.

Time cost compounds: Manual check image downloads take 2-3 minutes each. A client with 50 checks means 2+ hours of download and data entry work.

Conto automates check image processing for these workflows:

1. Connects to client bank accounts
2. Downloads check images in batch
3. Extracts payee information via OCR
4. Matches images to transactions
5. Exports categorized data to accounting software

For tax practices with construction, legal, or B2B clients, automation reduces the check image bottleneck from hours to minutes. The industries aren’t going to stop using checks anytime soon. But the manual work of processing them doesn’t have to continue.

See how Conto handles check image extraction

Frequently Asked Questions

Which industry uses the most paper checks? Construction leads with 76% of subcontractors receiving payments by check. The industry’s payment chain structure (owner to GC to sub to supplier) and documentation requirements for lien rights keep checks dominant.

Why do law firms still use checks? Law firms use checks for IOLTA trust account compliance. Processing fees for electronic payments cannot be deducted from client funds, and the detailed record-keeping requirements favor check payment documentation.

Are paper checks disappearing? Slowly. Consumer check usage dropped from 19% to 7% of bill payments between 2020-2024. But B2B checks remain at 40% of transactions, and specific industries like construction show minimal decline.

What percentage of B2B payments are checks? Approximately 40% of B2B transactions use paper checks, representing over half of the $25 trillion B2B market by value.

Why do rural businesses use more checks? Rural areas have limited broadband for electronic payments, higher rates of in-person banking (2x urban rates), and relationship-based lending that favors traditional payment methods.

How can accountants handle check-heavy clients? Automation tools like Conto batch-download check images, extract payee information via OCR, and match the data to bank statement transactions, reducing manual lookup time by 95%.