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Bectran Product Team
I
December 19, 2025
6 minutes to read
Credit risk usually focuses on the financial health of a customer before a sale is made. We analyze credit reports, check references, and set limits. One of the most significant exposure points happens after the credit decision is made, right at the moment of delivery. For many distributors and manufacturers, the final exchange of goods for payment relies on a physical handoff. A driver drops off product and picks up a paper check. This looks like a secure transaction. The goods are delivered, and payment is in hand.
That piece of paper is not immediate funds. It creates a temporal gap, a blind spot that can last anywhere from two to four days. During this window, the customer has the product, but the supplier has not yet confirmed the validity of the payment. This delay is where fraud thrives.
When a driver accepts a check, they can't verify funds. The check travels in the truck cab, returns to the warehouse, and sits overnight if the clerk has left. Then it takes 2-3 days to clear.
Day 1: Driver delivers product, picks up check. Warehouse clerk already left.
Day 2: Check deposited.
Day 3-4: Check clears or bounces.
By the time the bank flags an NSF or closed account, the customer has had your inventory for 48-72 hours. If the check bounces, the product is gone and the "customer" has disappeared.
You possess a promise of payment that can't be verified for days. The customer possesses your inventory immediately.
To close this window, we have to understand why it remains open despite advancements in digital banking. The failure is a combination of legacy habits and process silos.
Drivers operate in a physical world of routes, traffic, and loading docks. Finance teams operate in a digital world of ledgers and bank portals. The physical check is the only bridge between these two worlds, and it is a slow one. Drivers are not equipped with point-of-sale verification tools, so they cannot validate a check upon receipt. They accept it based on trust. The validation process is deferred until the check physically reaches a finance professional, which creates the time lag.
Office hours vs. delivery hours creates a critical operational flaw. Warehouses and delivery fleets often operate 24/7 or late into the evening. Administrative offices typically close at 5:00 PM. If a check arrives at the branch at 5:30 PM, it sits in a safe or a desk drawer until the next morning. If this happens on a Friday, that check sits until Monday. The float extends to four or five days, giving a fraudster ample time to disappear.
Most ERP systems record the payment as soon as the check is logged or applied. The customer's balance may technically show as "paid" or "pending," releasing up credit availability for new orders. The system assumes the check is good until proven bad. This default stance of trust allows repeat fraud, where a bad actor might place a second order quickly before the first check bounces.
There is a distinction between a customer who is simply poor at cash management and a bad actor.
The 72-hour blind spot serves both, but the latter is unrecoverable.
For nearly a century, Monrovia Nursery Company built its success on craftsmanship, sustainability, and customer relationships. As their business accelerated and operations expanded, their traditional method of handling payments began to show its limitations. The process of receiving mailed checks and manually matching invoices was slowing the pace of business. While it was the industry standard, Monrovia recognized the need for change. They faced a dilemma: How could they modernize payment processing without compromising their exceptional customer service?
By implementing a digital payment portal that accepts credit cards and ACH, Monrovia eliminated the check fraud window entirely. Customers could make payments through verified digital methods, giving Monrovia confirmed funds before product left the nursery. The results were dramatic. Payments were collected 4x as fast, with a payment portal adoption rate exceeding 90%. According to Frank Van Straalan, CFO at Monrovia: "We collect money faster. Compared to last year, we are $10 million ahead, which is substantial in our business."
Processing disputes, which once took weeks or even several months, can now be completed in a single day. The shift from paper checks to digital payments not only eliminated fraud risk but accelerated their entire order-to-cash cycle.
Eliminating this risk requires moving verification closer to the point of exchange. We cannot rely solely on the speed of the banking system. We must change the workflow of payment acceptance.
For new accounts or customers with a history of late payments, a "Good Funds" policy is essential. This means payment must be verified before product is released. This can be achieved through:
Modernize the driver's role without turning them into accountants. Instead of accepting a physical paper check to be transported back to the office, drivers can be equipped with mobile capture tools.
Not all customers should have the privilege of paying by physical check upon delivery. Segment your customer base:
If you must accept physical checks, map the timeline of that check from the customer's hand to your bank account.
If the answer is more than 24 hours, the process is broken. Implement remote deposit capture (RDC) scanners at every branch or warehouse location so checks do not need to be physically mailed or couriered to a central finance office.
Fixing the check acceptance workflow impacts the broader financial health of the organization.
Revenue Protection
When fraud occurs involving physical goods, you lose twice: you lose the cost of the goods sold (COGS) and the potential revenue. For low-margin distributors, making up for a single fraudulent order of $10,000 might require $100,000 in new sales. Closing the blind spot protects net income directly.
Safety and Liability
Asking drivers to carry checks (or worse, cash) creates a safety risk. It makes delivery vehicles targets. Moving payments to digital channels improves driver safety and reduces liability.
Operational Efficiency
Chasing a bounced check is expensive. It involves bank fees for the returned item, AR staff time to contact the customer, reversing the payment in the ERP, restricting the account, and potential legal fees or collections agency costs. Preventing the bad check at the source removes this entire workload from the credit department.
The reliance on physical checks in B2B transactions is declining, but it hasn't disappeared. As long as drivers are accepting paper payments, the risk of the 72-hour blind spot remains. Credit managers must treat the logistics of payment as seriously as the credit application itself.
Actionable Takeaways:
Still accepting physical checks at delivery? Bectran's payment portal accepts ACH, credit card, and wire transfers with real-time verification—eliminating the 72-hour fraud window and giving you confirmed funds before product leaves the dock. See how digital payments work.
300+ tools for efficiency and risk management
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