Opinion

Cheque points 1

Finance | 27 Apr 2008

Philip Anthony calls on charities to embrace e-payments.

In some areas of IT the charity sector is at the cutting edge - innovative fundraising techniques and use of web technologies spring to mind. But in the back office, which perhaps doesn’t always get the attention it should, it is fair to say that some organisations need a nudge into the 21st century. The continued issuing of payment with quill and paper is probably one of the best examples. At a time when high street stores such as Marks and Spencer no longer accept payment by cheque, movement to e-payment within the sector has been relatively slow.

Based on experience at least 50 per cent of third sector payments are still being made by cheque, while in contrast less than 10 per cent of commercial ones are. We’re not in a position to do an M&S and say “e-payment only please” so for the moment the best we can do is encourage the switch. We estimate that it costs about £1 more to process each paper item compared to processing an electronic payment. It probably costs the sender a similar amount. With the paper payment there’s postage costs, higher bank costs and, most expensive of all, the staff time to physically handle the item. The overall saving makes it well worth doing.

The main argument that charities have against embracing e-payment is understandably the issue of security. This is a valid concern and certainly e-payments need secure office practices. But my view is that keeping password and logins secure is just as easy or as hard as keeping the cheque book secure. In fact, in the high profile fraud cases in the third sector one of the principle methods of theft is issuing cheques that are then deposited in other accounts - a weakness that e- payments don’t have.

However, there is perhaps one major downside to embracing e-payment. The old stand-by excuse of “the cheque is in the post” just won’t cut it!

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