Why Your Business Needs To Stop Paying By Cheque

Why Your Business Needs To Stop Paying By Cheque

It’s been reported that cheques still account for a quarter of outgoing payments from all small businesses, micro businesses, sole traders and charities, which represents a vast amount of wasted time and money. It still amazes me how many businesses I see pay, and be paid, by cheque and, if you’re one of them, it’s time to stop.

Firstly, I do understand why. For many, paying by cheque is just too easy. It’s in the drawer next to them, where they can just take it out, write it, sign it, and post it…done. If you’re in the middle of free banking, there’s no charge for it either. I’ve also heard some businesses use the fact that it takes a week for a cheque to clear, as a reason to pay by cheque. So, why should (in my opinion) all businesses stop paying by cheque?

  • It can hurt your cashflow?

You may think that it’s great that a cheque will take a day or two to arrive at the supplier by post, followed by up to 5 working days to clear, but what if they don’t bank it straight away? Maybe their office isn’t close to the bank, and they end up holding on to the cheque for a few weeks or a month. Of course, you don’t know when they’ll bank and it and have absolutely no control over it either. They may just bank it and the time you’d least want them to.

  • It still costs money

The cost of issuing a cheque can cost you 80p in banking charges, unless you’re in your free banking period. Even if you are, a 1st class stamp is 64p, plus stationery and the time it takes to walk to the post box.

  • Think of your supplier

They’ve provided the service and now they have to make a trip to the bank to pay in a cheque that may cost them charges, not to mention the delay while they wait for the cheque to clear.

What’s The Alternative?

Paying online is free and quick, with most payments cleared within 2 hours and, most importantly, you’ll also be in complete control of when the money will leave your account. If the reason you’re paying by cheque is to delay the payment, then be honest and pay your supplier a week later.

Paying by cheque is lazy, a waste of time and money, and is considered a driving factor of the late payment problem that too many businesses experience.

Action Point

So, if you pay your bills by cheque, then stop and pay online.

 

 

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