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Is Your Business Ready for e-Day?
e-Days – 19th September 2014 – marks the date when public sector bodies will stop sending and accepting cheques from businesses.
This means that if your coffee shop pays its local authority charges by cheque, or if you sell your services to a government department and receive payment by cheque, you will need to switch to card or e-payments. The cheque, for such transactions, is being consigned to history.
1. What is e-Day?
e-Day in 2014 (19th September 2014) is the point at which the public sector will no longer write cheques to businesses, nor accept cheques from businesses. The particular focus of e-Day will be to encourage SMEs to migrate from cheque usage. The focus is on SMEs as they are either issuers or receivers of more than 55%* of all cheques in Ireland.
*Central Bank of Ireland 2014 Cheque Survey Report
2. Is the NPP getting rid of cheques?
No, the NPP is not getting rid of cheques. It is trying to improve Ireland’s competitiveness by reducing the cost of payments. Ireland is now one of only six EU member states that use cheques for regular payments. The intention is to reduce cheque usage in Ireland, particularly among businesses.
3. What are the alternatives to cheques?
There are many alternatives to cheques. Determining the most appropriate alternative will vary with the circumstances but, in most cases, an electronic credit transfer is used. Other options include direct debit, credit card, debit card and standing order.
4. Why does the NPP want to decrease the use of cheques?
Electronic payments, such as transferring money through e-banking, are far more efficient and economic than cheques. It is estimated that every cheque written costs around €3.55**, including administrative time processing cheques, the cost of time spent going to the bank to lodge cheques, parking and queuing.
Cheques need to be printed, go through several stages of transportation and require a degree of manual processing. Not only that, cheques are closely associated with late payments – businesses in countries in which cheques remain widespread take, on average, one month longer to get paid than in countries that don’t use many cheques.
5. How will small-medium businesses manage their cashflow without cheques?
One business’s attempt to “manage their cashflow” by delaying payment is just another business’s late payment. Ireland needs to build a culture in business where paying on time is the norm, and no business is put in the position where they have to delay payment. Even where cheques are paid on time, the need to process and clear cheques can delay the receipt of funds for a business. By law, electronic payments must be made available next day.
6. Will Government stamp duty on cheques increase?
There is no recommendation in the National Payments Plan relating to Government stamp duty on cheques, which is a matter for the Minister of Finance.
7. Why haven’t businesses been given more notice for e-Day?
The e-Day initiative was launched on 19th September 2013 by Minster Brian Hayes, a full 12 months in advance of the e-Day live date. The Department of Finance also issued a reminder in May 2014, while the Central Bank issued press releases about e-Day in June and August 2014. There have also been numerous articles in business publications.
8. Have businesses been consulted in the lead-up to e-Day?
Yes. A Cheque Working Group, run by the National Payments Plan programme office, has been in operation in the Central Bank for over a year. This Working Group included, amongst others, Chambers Ireland, ISME and the Small Firms Association.
9. Does e-Day affect consumer cheques?
No. However, government departments and offices, local authorities and state agencies are encouraged to provide electronic options for all payments received from consumers. This would further promote the use of non-paper based systems across the economy. The National Payments Plan explicitly recognises that moving from cheques would be very difficult or even impossible for some people.
10. What will happen if a business can only write a cheque? Is it possible that they could face fines or imprisonment for non-payment?
It is hoped that businesses, in conjunction with the relevant government departments and agencies, will successfully have migrated away from cheques in advance of e-Day. Cheque volumes among businesses are already declining rapidly, and have fallen by almost one-quarter in the last two years alone.
The Government’s e-Day circular makes it clear that public bodies will work with businesses in making this transition – ultimately e-Day is about helping businesses. Businesses are encouraged to contact any Government Departments or agencies they deal with in advance of e-Day, to understand what their options are to make or receive payments other than by cheque.
Learn more about e-Day by visiting www.jointheevolution.ie.
Related AIB information/products:
- E-Day: Useful Information for AIB Business Customer
- Direct Debit Originator
- Standing Order
- AIB Visa Business Credit Cards
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