So after all the head scratching about how to replace payments by cheque, we’re not going to lose them after all. They had been due to be phased out completely by 2018, but no-one has been able to come up with a viable alternative, so the decision has been reversed.
Reasons for Phasing Out Cheques
The original proposals to stop them had been made because the number of payments by cheque has been dropping significantly since the early 1990s, culminating in a reduction by nearly half over the last five years. The widespread use of other methods of payment such as direct debits, BACS or CHAPs, or plastic cards in person or on the phone or internet has also saved the expense and hassle of preparing, signing and sending cheques by post.
Reasons for Not Phasing Them out
However, last month the Payments Council announced that the planned closing of cheque clearing has been cancelled. This was agreed, their announcement said, after they had consulted with over 600 stakeholder groups. Also, its members had been unable to come up with the paper based solution to using cheques, which would be essential to some sectors of the community including some small businesses. And we probably all know how much opposition there has been from members of the public and the MPs representing them, as well as charities which often receive donations by cheque.
Cheques are More Risky Now
While 2018 is still a way off, and many small businesses have not yet started to put other payment options in place, some retailers have already stopped accepting cheques. Will they have to do a U-turn? The problem is that cheques no longer have a guarantee, letting the banks off the hook if they are fraudulent.
Anyone who exchanges goods or services for a cheque from someone they don’t know and trust is asking for trouble. So people who want to continue using them are still likely to find it difficult to get them accepted now that the cheque guarantee card can no longer be used.
There may not be much risk in continuing to accept cheques from long-term and trusted customers, or those you have for which you have completed credit checks. It’s a different matter though, if you are dealing with individuals on a one-off basis, and have no way of knowing if their cheques are genuine.
Your outsourced bookkeepers are well aware of the problems and know how their other clients are dealing with them. Why not ask them for advice if you are unsure of anything?