Faster finances (or ‘yeah, right…’)

Smaller businesses and in particular the self-employed like me will be delighted with the confirmation that the new fast clearance of payments into the banking system is coming this week. From …

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28th May 2008 at 11:28 am

Smaller businesses and in particular the self-employed like me will be delighted with the confirmation that the new fast clearance of payments into the banking system is coming this week. From now on when you put a cheque into your bank or when someone pays you electronically it won’t take the regulation three days to clear.

Actually money into my business bank take even longer, with one individual having initiated an electronic transfer last Tuesday and I still don’t have it (well, they say it went through last Tuesday and they’ve been reliable in the past). The new system instigated yesterday doesn’t seem to have speeded it along at all.

This is of course the real problem with payments and cash flow. People don’t always pay when they say they will. It’ not always their fault; one freelance commissioned me for a piece of work a while back and has been unable to pay me because her (inevitably larger) client hadn’t coughed up themselves. Payment for this ‘ere blog, meanwhile, are made at the same time each month regularly as you please and yes, they’ll now turn up a day or two earlier but I don’t really care – it’s the regularity and predictability of when these things will arrive that makes the difference, not the fact that the banks have – selectively if the BBC report is accurate – started to get slightly faster in their internal processes.

Of course it’s always been absurd that when I can pay for an Amazon purchase automatically it still takes over five working days for someone to get cash from their account into mine, particularly when we share the same bank. But this isn’t the great event some of the participants have been making out – it’s a tweak, no more than that.

Guy Clapperton

Guy Clapperton is a freelance journalist who specialises in small business issues and has written for the likes of The Guardian, the FT and the Daily Mirror. Guy has written about finance and franchising for SmallBizPod. http://www.guyclapperton.co.uk

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  1. Steve says:

    I think you are mixing up changes to the way banks handle unpaid cheques with the new Faster Payments system launched at the end of May.

    The unpaid cheques system changed in Dec 2007 and regulates how quickly you an get value for a cheque paid into your account. it also ensures that if a cheque has not been debited to your account by Day 6 then you can assume it’s been paid and is fully cleared.

    Faster Payments is a more gradual launch across banks for a new electronic payment system for UK bank to bank payments. Money will arrive same day if sent this way, and probably within a couple of hours max, maybe even seconds or minutes.

    Banks are running their own timetables for when this takes effect. You’ll need to ask your own bank when it kicks in for you to send or receive them. And of course it will depend on the payers bank too. But it should mean quicker payments for many. And cleaed funds when the money arrives.

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