Should I still be taking cheque payments?

Should I still be taking cheque payments? That’s a question I get asked a lot.

To be honest, there isn’t a right or a wrong answer. My advice to anyone who’s considering stopping cheques or whether they still want to take cheques is to consider the following points:

Clarity on payment types helps get you paid quicker

Clarity on payment types helps get you paid quicker

If someone sends you a cheque payment, they still have to post it. The postman’s got to collect it, it needs to be mail sorted, it’s got to get to the right postman to bring it to you, you’ll need to open the envelope, check it’s been made out to the right person, that it’s made out for the right value and that it’s signed and dated.

Once you’ve checked all of those, you then have to take time out of your day to go to the bank, queue at the bank, pay it into the bank and wait for them to process it.

The funds will show in your account, probably within three days, possibly five days and for some, even 7 days but remember, cheques can be cancelled up to six months from issue.

Therefore, you’ve taken time out when you could be doing client work in order to enable somebody to pay you by cheque.

Consider your hourly rate; the time it’s taken you to check the cheque, go to the bank, pay it in and to get back to your office again. How much time will that take? If you were doing this as a billable project, how much would you charge for that time?

If it’s not extortionate and you still want to accept cheques, then take it as an administration fee. Put in your terms that payments by cheque will include an administration fee of £xx. By putting it in your terms doesn’t mean you have to apply it. Say, for example, you work for charities that only pay by cheque because they need two signatories and they don’t have the funds for electronic banking because there’s an administration fee, you can always waive it for them.

Cheques can be convenient for the customer but they’re not convenient for you. Alternatively, put in your terms that you don’t take cheques. Tell people you prefer payment by BACS, credit card or direct debit. Let customers come to you if they can’t manage to pay you that way. At which point start a discussion with them, explain about the administration fee and get their sign in and agreement they’re going to pay it.

I’m not saying don’t take cheques, I’m just saying consider the length of time it takes you to process a cheque and the length of time it takes to access the funds when paid by cheque.

Take all of this into consideration when writing your terms and conditions.

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1 Comment

  1. Paul

    “cheques can be cancelled up to six months from issue”

    Whilst that’s a concern if you don’t pay in cheques promptly, in the UK the funds are guaranteed six working days after you pay in the cheque (assuming you pay a sterling cheque drawn on a UK bank account into a sterling account at a UK bank). The clearing time will also be reduced to 2 working days (including the day the cheque was paid in) in 2017/18 as banks will process electronic images of cheques instead of waiting for the paper copy. You may even be able to take the image of the cheque yourself via a smartphone app, so you won’t even have to go to the bank.

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