Three reasons why one business keeps on using cheques

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Cheques are often seen as an increasingly outdated way of paying, with people opting for bank transfers, with digital cheque scanners a stopgap until they disappear completely.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.

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:

1. 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.
2. A large number of our customers are not comfortable or experienced using the internet, so prefer to order by post or by telephone.
3. 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.

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.

‘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: ‘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.’