By Simon Bell, Commercial Manager for Sage Ireland
Today (September 26th 2013) marks the announcement of the e-Day initiative by the Department of Finance, but what is it all about and why is this one of the most significant changes in the Irish business landscape in the last number of decades?
e-Day is one of a number of forthcoming initiatives under the National Payments Plan that aims to drive a significant increase in the usage of ePayments in the Irish economy over the coming two years. Let’s start at the beginning,
What exactly is the National Payments Plan?
The National Payments Plan (NPP) was launched in April 2013 and outlines the specific initiatives that will be undertaken in the Irish economy over the next two years that aim to increase the use of ePayments in the Irish economy. ePayments are a critical success driver in terms of economic competitiveness for the Irish economy as they will drive down the cost to the taxpayer of the payments systems currently in place and will also enhance productivity in the economy in general by shortening payment cycles and reducing the level of manual payment handling in businesses. The initiative is being led by the Central Bank of Ireland, alongside government, the consumer and industry to deliver the right solutions to achieve the aim of increasing usage of ePayments.
So what is e-Day all about?
A key tenant of the NPP is the reduction in cheque usage in the economy as a whole. To support this from September 19th 2014, all Central Government, local authorities and State agencies will no longer issue or accept cheque payments.
What does that mean for my business?
At first glance this seems reasonably straight-forward as an initiative, however the implications for business are going to be significant. The NPP outlines for example that SMEs are either issuers or receivers of c.60% of all cheques in Ireland. In simple accounting terms the government (and by extension its departments and agencies) are probably the biggest creditor on your books in terms of value of payments that you will make to them annually by means of some combination of VAT, Rates, PAYE, USC, Employer PRSI, Local Property Tax etc. If you are now in a position whereby, the payments to government and its agencies are currently made by cheque the implications are not only that this payment mechanic will be taken away but also the associated credit timelines that you had against these types of payments are also removed. In the past, where a cheque in the post meant a week or so before it was processed, ePayments will reduce the timeline to typically less than 24 hours. This may also force you to think a little differently about the payment methods that you make available to your customers, as a delayed receipt coupled with an instant payment to government may leave you with a temporary but significant cashflow issue.
Sage is here to help
At Sage we work with over 40,000 businesses across Ireland, therefore we understand the challenges and opportunities faced by these businesses every day of the week and we are here to assist. We have software and support solutions that will assist your business in the transition to ePayments and the considerations around this transition in terms of credit and cashflow management. We will also be providing ongoing updates via our blog on the various components of the National Payments Plan and the initiatives as they are coming up to help you and your business stay ahead of the game.
To find out more call us on 1890 88 20 40 or leave a comment below and we can answer your questions.
More information on the ePayments functionality in Sage software is available here: