Will new cheque imaging system help your business get paid faster?

25/01/2018

A new image-based cheque clearing system which is designed to speed up cheque processing times has been introduced. But will it help businesses get paid faster?

The short answer is yes.

Until now cheques have always been slow to process. It can take up to six working days for all the appropriate checks to be made and for the money to be available in your bank account.

However, under the new image-based system this will now be significantly faster.

If a customer pays in a cheque on a weekday (Monday to Friday), then they will be able to withdraw the funds by 23.59 on the next weekday (excluding bank holidays) at the latest.

This is welcome news to businesses who accept payment by cheque as they will now have access to the funds much faster than they are used to.

Also, some banks and building societies may give their customers the additional option of paying in an image of the cheque – by using a secure mobile banking app on their smartphone or tablet.

For business and charity customers banks may provide desktop scanners linked to their online bank account, allowing them to pay in, as digital images, large numbers of cheques that they receive.

This will further reduce processing times as there is no need to go to a branch to pay it in.

However, whilst the roll out of cheque imaging began in October 2017 it won’t be until later this year that all the UK’s banks and building societies will clear all cheques to the new faster timescale.

Until then the two clearing systems will operate in parallel, with some cheques clearing quickly and others sticking to the old slower paper-based system.

Banks and building societies will be advising their customers of their individual roll-out plans as appropriate.

This means that not all businesses will be able to benefit from the faster timescales right away.

But, the late payment risk remains

Unfortunately, the new cheque imaging system won’t serve to eliminate all of the delay associated with cheque payments.

Cheques will still be prone to human error, with misspelt names or addresses on envelopes meaning that they never make it to the intended recipient.

Also, “The cheque is in the post,” has always been one of the most common late payment excuses that businesses hear.

We’ve even heard stories of more elaborate cheque-related late payment excuses including, “my puppy ate my chequebook”, “I can’t post the cheque because the post box has been super-glued by vandals” and “our senior managers are out of the country at a seminar and no cheques have been signed.”

Whilst sometimes these late payment excuses can be true, more often than not it is simply a stalling tactic used by customers to delay making a payment.

Under the new system cheques will still have to be posted, or handed to you by your customer, so this element of risk will remain.

It’s irrelevant how quickly the bank can process a cheque for you if you never receive it from the customer in the first place.

This highlights the need for businesses to ensure that they are doing all that they can throughout the credit control process to keep on top of their customers and ensure they get paid on time.

By putting in courtesy calls at the right times you can ensure that you remain front of mind with your customers and spot any warning signs that they might not make payment on time.

If during one of these calls you are met with this late payment excuse, the simple response should be to ask for the cheque number and the postal date, whilst checking that they have your correct company address.

Whilst this improvement in cheque processing time is a positive step, offering alternative payment methods for customers, such as BACS transfer or direct debit, can assist in getting the money you’re owed faster.

If you would like to hear more about how you can reduce the issue of late payment for your business, as an experienced credit control and debt collections agency, we can help. Our team would be pleased to assist, and are available on 0800 9774848 or emailed at collections@hiltonbaird.co.uk