What Is a Check Run? A Step-by-Step Process for Business

A check run is a systematic process businesses use to issue multiple payments, typically to vendors or for other operational expenses, at a scheduled time. The fundamental purpose of a check run is to streamline payment processing, helping businesses manage their cash flow more effectively, maintain positive relationships with suppliers, and enhance overall record-keeping. Consolidating payments into batch sessions, often performed weekly or bi-weekly, saves considerable time compared to processing individual transactions throughout the month.

Preparing for a Check Run

Preparation begins with collecting all outstanding invoices, expense reports, or other payment authorizations from various departments. Businesses must ensure that every payment request is legitimate and properly documented.

After gathering documents, verify the accuracy of each invoice by comparing it against corresponding purchase orders or contracts. This verification process confirms that the goods or services were received as ordered and that the amounts are correct. Internal approvals from relevant departments or authorized management are also secured for each payment, which serves as a control mechanism to prevent unauthorized disbursements.

Maintaining current and accurate vendor information within the accounting system is also important. This includes verifying the vendor’s name, address, and payment terms, as well as their Taxpayer Identification Number (TIN) to ensure compliance with tax reporting requirements, such as for Form 1099. Invoices are often grouped into batches based on criteria like due dates, vendor type, or payment method, and urgent payments are prioritized to avoid late fees.

Before proceeding, confirm that sufficient funds are available in the business’s bank account to cover all scheduled payments, preventing overdrafts and ensuring smooth transaction processing. Accounting software plays a central role in this stage, allowing businesses to select invoices for payment and generate a preliminary payment list or report.

Executing the Check Run

Execution involves generating and distributing payments. This typically starts with using accounting software to produce the checks, which are printed on specialized check stock. Businesses can use pre-printed checks or blank check stock, with the latter often preferred for enhanced security as all client-specific data is printed at the time of the run.

After printing, the generated checks are carefully reviewed against the payment list created during the preparation phase to ensure accuracy in payee names, amounts, and dates. Authorized signatures are then obtained on the checks, a step that often involves multiple signatories for larger amounts, reinforcing internal controls.

The signed checks are then prepared for distribution, which frequently involves stuffing them into envelopes and applying postage for mailing. Some businesses opt for third-party check fulfillment services that handle the printing, processing, and mailing. While the focus remains on physical checks, many businesses integrate electronic payment methods, such as Automated Clearing House (ACH) transfers, into their overall payment runs to leverage faster processing and reduced costs.

Finalizing and Recording Payments

After the checks have been issued and sent, the final stage of a check run focuses on proper accounting and record-keeping. The accounting system is updated immediately to reflect that the invoices have been paid, which reduces the accounts payable balance and records the corresponding cash outflow.

A crucial post-payment step is reconciling the check run batch with the bank account balance. This reconciliation process confirms that all issued payments are correctly accounted for and that the bank’s records match the business’s internal ledger. Regular reconciliation helps identify any discrepancies or errors promptly.

For audit trails and future reference, organizing and archiving all supporting documentation is essential. This documentation includes copies of invoices, payment approvals, and check stubs or digital copies. These records are maintained for a period mandated by regulations and internal policies, typically for several years, to support financial audits and inquiries.

Occasionally, checks may be returned due to insufficient funds or other issues. Businesses handle these exceptions by contacting the payer to arrange for alternative payment and may charge a returned check fee. The original transaction in the accounting system is adjusted to reflect the returned payment, and collection efforts are initiated.