Earlier in the week, we revealed how 10,000 cheques a day had been deposited over the festive period using HSBC’s digital cheque scanner.
Cheques are often seen as an increasingly outdated way of paying, with people opting for bank transfers, with digital cheque scanners a stopgap until they disappear completely.
However, one This is Money reader contacted us to explain why, for her business, cheques aren’t dead yet and why she even switched banks to take advantage of digital cheque scanning.
Not quite Bronze Age! Debbie Foster explained why the sculpture firm she runs, Nelson & Forbes, still relies on cheques for payment
Debbie Foster is managing director of Nelson & Forbes, a company based in Hemel Hempstead, Hertfordshire.
It makes hand-made bronze sculptures which sell from £95 all the way up to almost £2,000.
She said: ‘Cheques as a means of payment are still important to our customers.
‘Paying in and waiting for cheques to clear was slow and effortful, so the advent of digital cheque imaging therefore could not come soon enough for us.
‘Approximately 80 per cent of our sculptures are bought as presents and therefore the purchase is shrouded in secrecy.’
She said there were three big reasons why Nelson & Forbes customers still opted to pay by cheque – explaining they’re not quite in the Bronze Age yet:
- Paying with a cheque rather than card allows a gift purchase to be kept a secret, as only the cheque number shows on the statement, not our company name. This is useful when buying a present for the other holder of a joint bank account.
- A large number of our customers are not comfortable or experienced using the internet, so prefer to order by post or by telephone.
- Many of our older customers are not comfortable giving card details over the telephone or on an order for security reasons, or simply lack of experience doing this, so prefer to post a cheque to us.
The company sells handmade bronze sculptures, usually bought as gifts, which range in price from £95 hares to £1,900 elephants
However, while often a preferred means of payment, she said the hassle of waiting for cheques to clear did often make life difficult.
She added: ‘We continue to offer cheques as a means of payment, as it would prevent a large number of customers from ordering if we did not.
‘However, we work on a farm in the countryside, so every time we received a cheque, we had to drive into town, find somewhere to park and queue up to pay in the cheque. This costs time and money.
This is Money asked readers who still use cheques on a regular basis to get in touch
‘We only dispatch a sculpture once the cheque has cleared, which would take several working days to happen.
‘Our customers have come to expect a high level of service from us, so because we will not be dispatching their sculpture as soon as we receive their cheque, we would write them an email, or more often than not, a letter, to confirm receipt of their cheque.
‘We would also confirm that a sculpture had been reserved in their name and when they could expect their sculpture to arrive.’
Given that snapping a cheque and digitally scanning it can have the money cleared by the next day, this would understandably make life much easier for businesses like Nelson & Forbes.
At the time it was introduced however, there was just one problem – its bank didn’t offer it.
Debbie said their existing bank NatWest didn’t offer the option of digital cheque scanning, so in October 2018 switched to Lloyds Bank. Barclays, Halifax and Starling also offer the service
Debbie said: ‘We heard about cheque imaging several years ago and had been regularly asking our bank, NatWest, when they were going to introduce the system. The staff in branch always denied any knowledge of it.
‘Eventually we had enough of driving into town regularly to pay in cheques, so switched to a Lloyds account instead, largely because they offered cheque imaging.
‘Since we transferred our account in October 2018, we have greatly enjoyed the benefits of cheque imaging.’
Barclays, Halifax and smartphone-only bank Starling also offer the digital scanning service.
‘The only drawback for us’, Debbie said, ‘is the total amounts that can be deposited are quite low, £500 per cheque and £1,000 per day, given our average order value.
‘Also the imaging technology can find reading handwriting difficult, or if one of the printed characters on the cheque has rubbed off where it was folded.
‘In both circumstances, the cheque will show as not cleared and we still have to drive down to the bank.’
But, she said, ‘on balance, it has been a time, effort and money saver for us, which helps us deliver a high end service to our customers.’
Four reasons why our business loves digital cheque scanning:
Debbie explains below why she likes the cheque scanning app:
- Very fast clearance. Typically, the cheque is cleared the next working day. This means we can dispatch the customer’s order the day after we receive their cheque, meaning they receive their order much faster, and we save the step of sending them a letter in the interim. This results in a much better level of customer service experience.
- On a similar note, if there is a problem with the cheque clearing, we usually know the next day, so we can resolve this with the customer promptly.
- Bank statements are much easier to reconcile as each cheque is now deposited with a reference of our choosing, allowing us to easily identify which transaction it corresponds to. In the past, if we paid in two cheques for the same amount on the same day (which happened often), if one cleared and one did not, it added work ascertaining which transaction was which. With cheque imaging, this is easy.
- Our branch closes at 4.30pm, so we can’t helpfully pay in a cheque on the way home. Cheque imaging means we can pay in a cheque any time we choose, and without driving in to the town.
THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS
Santander’s 123 Lite Account will pay up to 3% cashback on household bills. There is a £1 monthly fee and you must log in to mobile or online banking regularly, deposit £500 per month and hold two direct debits to qualify.
NatWest’s Reward Silver Account offers a £175 switching incentive to new and existing customers as well as insurance cover for European travel. Customers can also earn rewards which can be redeemed as cash or gift cards.
Club Lloyds’s Current Account offers benefits such as cinema tickets, magazine subscriptions and dining cards to current account holders. There is no cost if you pay £1,500 each month, otherwise a £3 fee applies. Must hold two direct debits to earn monthly credit interest.
HSBC’s Advance Account offers £175 cash if you switch to it. The account comes with a £1,000 starting overdraft and 2.75% regular saver account. There is no monthly fee, however you must deposit £1,750 per month into the account.
Nationwide’s FlexDirect account comes with 5% interest on up to £2,500 – the highest interest rate on any current account – if you pay in at least £1,000 each month, plus a fee-free overdraft. Both perks last for a year.
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