Why Bounced Cheques Mean Bad Business
Izvor: KiWi
Small businesses depend heavily on keeping a great cash-flow and having their customers pay on time. When cash flow banking system 1 / 2 of the UK's small businesses are susceptible to poor cashflow that is bad news for small businesses.
Recent research implies that large, medium and little organizations have experienced several bounced cheques. Micro organizations, with less than 10 workers, have been less affected.
One-way in which this could happen is when someone pays a company by check for goods or services. It is paid by the business within their bank. The prudent business owner checks that the check has cleared and writes out new cheques based on the money that is in-the business bank account. It later turns out that the company manager is now overdrawn and in debt and the cheque had not satisfied at all. This implies high bank fees and makes it less likely that business facilities will soon be expanded later on.
Understanding The Cheque Cleaning Program
Most people know that a cheque requires anywhere from three to seven business days to clear. The time that the check clears depends on:
1. The currency that the check is in. Sterling cheques in the UK clear quicker than cheques in French francs, for example.
2. Whether the bank that has issued the cheque is in the same group of organizations whilst the bank the cheque will be paid into. Cheques generally just take longer to clear when settled outside the banking group.
3. If the check is paid in on a business day.
What most people don't know is that most banks 'obvious' cheques when the regular clearing period has passed. This often happens before the bank has verified the resources can be found. The financial institution makes the total amount of the cheque available for withdrawal but it has not really eliminated.
Some unscrupulous people may use this to their advantage. For example, they are able to write the amount on the cheque, pay by cheque for products or services, ask for a return and disappear with the money ahead of when the cheque clearing process is complete. It is the small business that is left facing an angry bank manager and a big bill, once the original check bounces.
Payment Help For Businesses
Fortunately, you can find other ways for organizations to get money from their customers. The foremost is the Banks Automated Clearing System (BACS). It is a secure system where funds get just three times to clear. This technique is often used to cover salary cheques straight to employee's bank accounts.
A more high priced system (with costs around 2-5 per transaction) is the Clearing House Automated Payment System (CHAPS). This technique allows same day electronic money transfers.
Companies who are worried about being left with a sizable debt must look into getting their customers to pay for by one of these methods where possible. This can reduce the high company cost of bounced cheques.
