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News - 7 March 2014

Plans unveiled to modernise cheque payments.

The government has unveiled detailed plans to modernise cheque payments.

This follows on from extensive investigation by asking for the views of consumers, businesses, charities and the banking industry on how best to implement changes that will boost the status of the cheque, reinforcing their relevance in 21st century Britain.

The government is proposing legislating for “cheque imaging” which will speed up cheque clearing times and give customers greater convenience and choice in how they deposit cheques. The reforms will enable banks to clear a certified, digital image of a cheque instead of a traditional paper cheque. This will secure the future of the cheque as a reliable method of payment in the UK, using proven technology which has been in operation in the United States for 10 years.

Mike Twomey, Marketing Manager of ABDS comments:
“This will reduce the time it takes for a cheque to clear, to as little as two days; it will increase consumer convenience and choice of ways to pay. While customers will continue to be able to deposit cheques at branches, cash machines, Post Offices or by post and still benefit from a faster clearing cycle, banks will also be able to offer the option of paying in cheques via smartphone or tablet.”

Cheques are a crucial part of the British payments landscape - nearly £840 billion of cheques were processed in 2012 – accounting for 10% of all payments made by individuals. They are especially important to small businesses – sole traders and other micro businesses who continue to make over a fifth of their outgoing payments in cheques. Cheques continue to be a vital channel for charitable donations. Nearly a third of smaller charities receive over 75% of their income by cheque.

Financial Secretary to the Treasury, Sajid Javid, said:
“This government is determined to create a banking sector that works for consumers and serves businesses.”

John Allan, National Chairman, Federation of Small Businesses, said:
“Many of our members, and their customers, still rely on cheques so will be pleased with the investment and innovation to ensure their continued use. Speeding up cheque payments into business accounts will help boost a firms’ cash-flow as many find the current process frustratingly slow.”

If you need any help and advice on Management Accounts, Budgets and Cash Flow Forecasts, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help in all your financial planning.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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