Wednesday 16 December 2009

All Change Is Not All Good

The call for cheques to be abandoned as a method of payment by 2018 is an inevitable step in the direction dictated by progress. Over the last 40 years the methods of payment have multiplied along with advancing technology and it is a wonder that cheques have maintained such a stronghold. Some 663 million transactions were conducted by cheque last year apparently.
What I have not heard mentioned however is the knock on effects. Is this also another nail in the coffin of the Royal Mail service? What are cheques used for nowadays? Shops do not take them anymore. The big supermarkets abandoned them a year or two back. I recall surprise at my own irritation when a customer paid by cheque in front of me in the queue and I wondered how it had crept up on me that the lengthy process of paying by cheque had become unacceptable.
Cheques are used for payments by post mainly. Of those millions of transactions possibly 75% were postal payments. That’s a lot of revenue for the post offices to lose. A good proportion of those payments are possible by some other means. The minority without a computer these days will necessarily be fewer by then. Those with an antipathy towards technology will have come to terms with on line banking.  Everyone will learn their pin number.  I witnessed an elderly lady checking with her daughter in a shop ‘Is my pin number 2036?’  There was an embarrassed shuffling all round at this flagrant breach of security etiquette.
So changes have a rippling effect beyond the obvious. The introduction of card payment mechanisms meant distance ordering became more available. Cash machines meant initially the availability of cash outside banking hours and then as machines were installed in remote locations the need to visit the Bank disappeared almost entirely.  The effect of this was that the Banks no longer have a captive audience they once had and sales targets assumed a greater importance. The banks have long been sectioned off into Retail and Commercial with the Retail arms dumbing down their longstanding staff and recruiting new staff as sales people. Gradually any expertise you might have found in the Branch has retreated with the retirement of experience leaving training anomalies all over the place.
I had an argument in Lloyds TSB a few months ago about a simple procedure with Executor and Trustee accounts.  The experience of the supervisor I was allowed to see was limited to some form filling and the processing centre she consulted at my insistence was not giving way. I should not have bothered. The understanding was not there anymore. I had dared to step away from the script on the clip board and no reasoning was to be tolerated from a mere customer. 
So the technology is useful. It speeds things up. The volume of transactions through the Banking system these days would never have been possible without it. It increases security enabling checks and counter measures no one would have thought possible a few years ago. The other face of the coin is that eCrime has become the subject of a special team for small business awareness. Frauds are still there, a tiny proportion of the overall figures, but enormous in their own register. Technology also standardises things, introducing efficiency but losing individuality and flexibility. It makes things possible. It makes things impossible. 
Change is good but not for its own sake. There are always losers. Quality, service, value (and not just the price) are all affected. As a small business you have to keep up with what is around if only to dismiss something as not relevant yet. Be aware of the market, your resources and the change in the wind. Your customers will too, so listen when they pass comment and do not dismiss them.  In the midst of it all there is advantage to be had by getting it right.
See Bob Shepherd Associates for practical help and guidance for small business. 

1 comment:

  1. Good points

    As someone who has worked in credit management for many years, cheques have seemingly ruled my life!

    But at the harder end of the spectrum when there is a difficulty collecting from a debtor, the writing of a cheque, whilst not giving absolute security, is certinaly preferable to the vague promise that "my bank will do the transfer" followed by the "oh they forgot"

    Also, post dated cheques are a form a security. And a dishonoured cheque is security in the sense that a court judgement can be obtained without defence

    And as someone who has dealt with many a client that has been struggling along waiting for "that payment", holding a cheque on the basis that it can be banked when they give the go ahead, is again preferable

    loss of cheques will mean the loss of flexibility in these situations I believe. Will we see the resurgance of Promisory Notes (still prevalent on the continent...especially Spain)?

    Whilst I am by no means a debt collector (credit management consultant for b2b), how to handle a tricky collection is something we advise on