Adrian Stafford-Jones, Managing Director, Albany Software, comments, “We were very surprised to find that nearly a quarter of those surveyed are still using cheques. Not only are cheques a very outdated, unreliable and costly way of making payments, they are also extremely time-consuming, with administration and processing times longer than those of other payment options. Companies who are still accepting cheques can also find themselves falling into the late payment spiral as they struggle with cash flow whilst waiting for cheques to arrive and funds to clear. Businesses still issuing cheques as a form of payment, need to consider the impact that this has on other organisations - estimated at an average of £39,000* per small company - placing a significant threat to business success.”
Stafford-Jones adds, “The concept of companies continuing to issue cheques or indeed any B2B transaction involving a cheque is somewhat archaic these days when you consider the inefficiency of this method of payment.”
Reports from the Payments Council make it clear that the use of cheques has been in decline since the 1990s with an accumulated 70% drop in the last 20 years**. There is good reason for this downward trend – electronic methods are more cost effective, secure, efficient and provide more financial control. In today’s economic climate, every organisation needs to run a tight ship and ensure costs are kept to a minimum. With the physical cost of issuing cheques more than 10x that of sending an electronic transfer there is no excuse for businesses to continue with cheques as a form of payment when transacting with other businesses.
The alternative to cheques, services such as Bacs and Faster Payments, offer a far more reliable and economical solution. Replacing archaic paper processes with automated solutions cuts back-office administration time and significantly reduces costs. The gulf between companies with a healthy cash flow and those sweating over debt can often be as simple as addressing issues such as cheque payments versus electronic payments.
The survey from Albany Software also found that 18% of companies still process same-day payroll and supplier payments via expensive and inefficient CHAPS. Stafford-Jones comments, “With Faster Payments, organisations can submit single or batch payments in near real-time and at a very low cost in comparison to CHAPS, enabling the finance or payroll team to make last-minute payments should the need arise.” For those companies already using Direct Bacs solutions, only 11% are actually processing payments using the evolving Faster Payment Service. Direct Bacs submitters need to realise that Faster Payments provide a very simple, quick and cost-effective payments contingency plan – especially for payroll.
Stafford-Jones comments, “It is the responsibility of businesses to ensure that crucial payments such as payroll are able to go ahead. By investing in Direct Bacs software organisations can set-up secure and validated payments process, which simultaneously provides a contingency service in the event of a software failure. As a result, organisations receive the reassurance that payments can always be processed, enhancing cash flow and ensuring staff wages are paid on-time.”
The evidence is clear, through utilising automated payment processes, companies can greatly streamline their back-office procedures, creating tangible time savings and reduce manual processes across the board.
Stafford-Jones concludes, “Too many organisations continue to use outdated payment processes that take too long, demand daily administration time and lack any kind of business continuity. Simply accepting painful, time-consuming traditional payment methods is short-sighted when companies can exploit the current generation of secure innovative electronic payment technologies to cut costs, minimise risk and achieve efficiency.”
Visit http://www.albany.co.uk for more information