MPs support cheque payments for small vendors

25 August 2011

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25 August 2011 | Angeline Albert

MPs are calling on banks to speed up the time it takes to process cheques so small suppliers can be paid more quickly.

In a report published yesterday by the TreasurySelect Committee, MPs welcomed the decision of the Payments Council not to scrap cheques, but urged the organisation to work with banks to make processing quicker than the five days it can take.

The Council, which was established by the Treasury, had set a date of 2018 to abolish the use of cheques, but in July it announced it would abandon the deadline and allow the payment method to continue indefinitely.

The Forum of PrivateBusiness was one of several organisations opposed to the abolition, and submitted evidence to the Committee stating the importance of this payment method for small businesses.

Although the use of cheques has fallen in Europe, they remain a favoured method of payment in parts of world, including India and China.

According to Andrew Jesse, vice president at e-procurement firm Basware, buyers need a flexible attitude to payment methods depending on their vendor’s location. In Finland, for example, payments are conducted electronically in the vast majority of business-to-business transactions.

“Stricter cheque processing procedures are a must to prevent them being used as a stalling tactic for payment, but at the end of the day, we still need cheques to work internationally,” he told SM. “A business needs to be aware of cultural differences when operating in other countries – for example India or the US.”

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