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Adieu the humble cheque

The recent announcement by the Payments Council to begin the process of phasing out cheques by 31 October 2018, has brought payment methods for all businesses into sharp focus, prompting a new era for business transactions. Now is the time for businesses to seriously consider payment alternatives in order to be sufficiently prepared ahead of the proposed deadline. The eight year timeframe for the phasing out of cheques is more than adequate to allow businesses to research and adopt new solutions in order to make the switchover an easy and painless process.

For some organisations the removal of the cheque will be seen as a significant movement ultimately changing the way they have operated for years. However, the benefits of incorporating new electronic payment technologies must be embraced. With cheques synonymous to longer clearing times – making a potential late payment even later – and exacerbating cash flow issues, businesses can realise the potential of services such as Direct Debits and Faster Payments in facilitating automated payments that improve cash flow while saving time, cost and resource.

The Payments Council’s announcement is set to be a catalyst for yet further changes and improvements to the B2B payments process. Take for example the potential introduction of B2B Direct Debits that should include new rules to allow SMEs to originate Direct Debits. If this is introduced by 2012, five years ahead of the target deadline, this will fully enable all organisations to implement payment alternatives which are more cost-effective than handling cheques.

Replacing cheques with faster, more secure and less administrative, Direct Debits and/or Faster Payments can only be a positive step forward for businesses, whether handling B2B or B2C transactions. With the future promising payment methods via mobile phones and the likes of pre-paid cards, early adoption of payment solutions that facilitate electronic transactions will ultimately ensure a head start and competitive edge for businesses that thrive on customer service and streamlined, easy payment processes for their customers.

Adrian Stafford-Jones
Managing Director, Albany Software

From the forum

Question: Pinsent Masons law firm has raised an interesting point: if workers say they can’t get to work because of the snow, does the company have to pay them?

Answer, from Ian Whyteside: It is an interesting subject but fundamentally the two views are not so far apart as it may seem.

It is right that employers should expect employees to make every effort to attend the workplace and carry out the duties they are contracted to complete. Failure to do this renders the employee at risk of not being paid.

So is the first view correct? Well yes, employees are paid to produce results and those results are laid down in their work schedule, terms and conditions, contract or whatever. If we don’t do so, then why should we be paid?

The second comment has not contradicted this, what they are trying to do is caution employers on merely automatically reducing pay for the failure to carry out the duties and responsibilities of the job. The contract may be specific in its requirement that payment is for work done, but it also has to be specific about the way non-payment is dealt with. Otherwise, as the legal expert has pointed out, the company may not be in a position to make the deduction.

Terms and conditions must contain the process by which these matters are dealt with, otherwise the employer’s ability to do so is restricted.

My advice is for employer and employee to wait for the problem to go, naturally, and then to look at it carefully.

Many employers and employees will play fair and share the responsibility by employers making payment for some of the days not worked and employees agreeing to take leave or working extra hours to make up the difference. That’s called being reasonable and grown up.

At the extremes you will find some employers will not pay at all and employees who will refuse to suffer any reduction, which isn’t very reasonable or grown up! But can we actually blame them for taking that stance? The employer may not be able to afford it and neither might the employee, particularly following the way business and domestic taxes and costs have risen so much over the past few years.

The key, for employees, is what is in the contract: is it clear enough about the rules for non attendance and about the method by which non attendance reductions are calculated and dealt with? Is the process automatic or must it be dealt with as a disciplinary matter? Whether the employer likes it or not, some may be forced to go through endless disciplinary processes in order to create the situation whereby they can reduce the pay of employees.

What bothers me is that this is, once again, a not unusual situation for people. With bad weather, transport disruptions and trades union actions, the inability to attend work through no fault of their own affects employees and their employers throughout the year, not just in winter, so why does it come up year after year? Surely employers can see the need to have the problem written into their procedures so that it can dealt with quickly and fairly at the proper time? It happens often enough for the answer to be written up by now.

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