Cheque U-turn is ‘pointless policy’. Will it effect late payment problems?

Robert Ashton, managing director of ethical chip and pin processor Ethecol, has said that the banks’ recent change of heart over the future of the written personal cheque is ‘pragmatism over pointless policy’.

“Whilst emotive to the few, most are voting with their debit cards and abandoning cheques. Hastening the inevitable demise is rather like bundling your very unwilling granny off to Dignitas when she has weeks left to live anyway – it’s far more sensitive in both cases to let nature take its course.”

Mr Ashton, who is regarded as one of the UK ’s most successful social entrepreneurs, and has written some 12 books on entrepreneurship is also co-Director of Ethecol Merchant Services CIC – a company that is legally bound to doing good and chooses to do this through chip & pin transactions.

His remarks come amid The Payments Council, the organisation which sets the strategy for UK payments, announcing recently that it had been forced into granting a reprieve to the personal payment cheque which had been destined to be scrapped by 2018.

Michelle Mitchell, of Age UK, commented that she was ‘delighted’ that public pressure had forced the banks into a U-turn.

It is no surprise that debit cards have largely replaced cheques for purchases but in 2009 there were still 3.5 million cheques written every day in the UK. This is largely cited as the reason for the Stay of Execution, as although the banks are obviously keen to hasten the demise of the cheque because electronic transactions require no staff time, they have come under intense public and political scrutiny of late, and will by wishing to deflect more negative press..

One has to wonder however if small businesses will largely be in favour of the reprieve? With the scope of electronic payment systems now being widened to encompass ‘faster payments’, were the recipient is paid almost in real time, the cheque still provides those businesses hell bent on delaying payments to their creditors a means to do so.

As SME’s move more of their banking online, which in itself largely attracts lower transactional fees dealing with electronic payments as opposed to banking cash or cheques, there are still some business for whom the excuse, “the cheque is in the post” will still be a their regular vocabulary.  Electronic payments can’t get lost in the post so are the banks just delaying progress to a solution to the wider ‘late payment’ problem or is there any weight to the cynics argument that whilst cheques take 2-5 days to be cashed, the banks can still collect interest on those balances whilst the money is in clearing?

The impact to the delay in the demise of the cheque will obviously impact on the incidence of late payment problems to UK SME’s, the key consideration is, by how much?

If you wish to engage CCDR to help protect and shield your business from late payments or your debtors going into liquidation, call us today and we can assist you in being proactive to reduce future bad debts through services such as our Outsourced Credit Control, or for those where the debtor isn’t paying, we have a range of services such as Debtor Tracing, Debt Mediation or Debt Recovery depending on what stage your late payment problems is affecting your business.

CCDR is a leading UK Debt Recovery specialist with international reach and a client base of SME’s and multinational organisations.

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