Guest blog: Is your organisation prepared for changes to cheque clearing times?
Change is coming to the way cheques are cleared. In this guest blog, Mark Hemingway, Communications and Stakeholder Manager at Cheque and Credit Clearing Company, explains what is happening and how it will affect foundations.
The time taken for cheques to clear in the UK is about to change.
Currently cheques take six week days to clear, but from the end of October 2017, banks and building societies will start to roll out a new, image-based clearing system which will mean that cheques will be cleared by the end of the next week day – which it is hoped will be a vast improvement on the existing system.
A key feature of the new system is that the cheque clearance process will be speeded up, so cheque recipients will see the money appear in their accounts more quickly. This also means that funds may also leave customer’s accounts more quickly than at present.
At some stage in the second half of 2018, all of the UK’s banks and building societies will clear all cheques via the image-based system. Until then, two clearing systems will operate in parallel, which means that some cheques will be cleared more quickly via the image system, and some will clear to the existing, six week day timescale through the current, paper-based system. Banks and building societies will be advising customers of their individual roll-out plans as appropriate.
The changes are part of the move by the industry away from the current clearing system (where hundreds of millions of physical paper cheques are actually transported around the UK each year), to a new system where the images of the cheques are electronically exchanged and cleared.
Customers will still write, give and post cheques as they do today. Recipients will still be able to pay in cheques as normal, such as at a bank or building society, by post or at an ATM. This continuation of regular customer practice is particularly important for charities, which receive many grants or donations by cheque.
Cheque imaging is also about providing more choice; some banks and building societies may offer their customers the option of paying-in an image of the cheque – by using a secure mobile banking app on their smartphone or tablet – rather than having to go to a bank.
How will it affect foundations?
Desktop scanners linked to online bank accounts may be provided to business and charity customers, allowing them to pay in any cheques they receive as digital images rather than having to visit their branch.
The shorter clearing time means that funds will leave foundations’ accounts more quickly, and the bank will notify customers sooner if there has been an issue with the cheque.
Individual banks and building societies will be contacting their customers to explain the changes and confirming what help they can provide to their customers. You may want to speak to your bank to see what plans they have during the roll-out period.
For more general information on the planned changes, visit the Cheque and Credit website which has lots of information available to charities explaining the planned changes.
Communications and Stakeholder Manager
Cheque and Credit Clearing Company