16th September 2014: Sage Ireland has today published five short tips for businesses in order to prepare for e-Day which is this Friday, September 19th. From this date, government, its departments and agencies will no longer issue cheques to or accept cheques from businesses.
“From a business perspective this will impact on payments to government such as VAT and commercial rates as well as any employer deductions to payroll made at source,” says Simon Bell, Commercial Manager, Sage Ireland. “More significantly, the change in the payment mechanic for these types of payments will have implications for a variety of areas from internal finance processes to cashflow planning and management, especially for small businesses.”
Sage has outlined five practical tips to assist businesses in their final preparations. These include:
1. Review your historic payments to government or its agencies in order to understand the typical value of these payments, how often they are paid, and identify the date the next payment is due in order to understand what impact this will have on cashflow.
2. If these payments were previously made by cheque, you will need to find out the recipient’s payment details including BIC / IBAN, in order to make a successful payment on time to avoid late payment penalties.
3. Understand your current processes for making payments to identify which have to change and ensure that you are aware of the SEPA regulations on timelines for submission of electronic payments. The reality is that if pay-runs currently happen at a particular time of the week / month, these may need to change in order to fulfil the requirements under SEPA. In particular, the first payment submission may need to be done up to 5 days in advance of the credit date.
4. Recognise that e-Day is simply the next step under the National Payments Plan that will fundamentally change the way that businesses manage payments as the market shifts from cash and cheque to electronic formats. You will need to ensure efficient cash flow management and enable faster payments into your business by facilitating your customers to pay you electronically or offer card payments. Cashflow is king so you need to ensure that you are managing it as best as possible for the health of your business.
5. Whilst e-Day might necessitate process change in your business which is typically uncomfortable and time consuming, it is important to bear in mind that cheque payments typically carry longer clearing times, are more costly and lead to longer delays in getting paid as a business.