Five reasons you may still need cheques and why

3 min
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Even though many people might not now use their cheque books very often, with money changing hands electronically in commercial environments, for the most part, the paper cheque does still play a part in money transactions in both business and for private individuals.

Here is five reasons you may still need cheques and why as told by Patrick Vernon.

Not quite a cashless society

Despite sometimes-wild predictions about when the UK and the rest of the world may become a totally cashless society, businesses certainly still use paper in terms of cash and cheques.

Indeed companies providing accounting software and related financial documentation are committed to paper money transaction methods as they continue to apply new tech such as producing high-tech paper cheques with advanced security features to prevent tampering, illicit copying and fraud.

So, when in daily life are paper cheques still required?

1. Small business payments

Maybe you are a small business yourself or use the services of very small or even one person concerns.

If so, taking payments by card may be problematic or even not possible. For example, maybe you use the services of a small-scale painter and decorator and they’re not able to take a card payment. Perhaps you’re reluctant to pay them cash, so a cheque is the best solution.

There’s an added benefit in that you can leave it for them in an envelope, which is much more secure than leaving ready cash. You can even mail it to them if, for example, they come and paint the exterior out of office hours.

2. Manage cash flow

Paying electronically usually means funds move from your account to the recipient’s pretty much instantly whereas cheque payments take at least a day or two to process.

This means you can promptly pay someone while still having a little breathing space before the money leaves your account. This may help if you’re juggling a period of heavy expense with a need to pay creditors.

Of course, this demands careful planning and, if it’s something you find yourself doing regularly, it may be time to examine your cash flow position.

3. Control

As said above, once an electronic payment is made it’s quick and irreversible.

Paying by cheque, along with being slower in processing time, is reversible in that you can stop a cheque by contacting your bank.

Maybe you’ve agreed to pay upfront on the understanding an item would be delivered by a certain date and time, or perhaps you’re not happy with work undertaken - or it’s unfinished by the agreed deadline? In cases like these you may choose to stop payment; something you couldn’t do if you’d paid electronically.

4. Creates records and a paper trail

Sometimes you may wish to generate a provable record of payments made.

For example, if you deal with a business who always seem to lose track of when you paid them electronically and claim you haven’t paid them when you have - something that can happen in organisations with various departments - then sending or hand delivering a cheque leaves no-one in doubt.

You’ll know as soon as the recipient has cashed it as there will be a record on your bank statement along with cheque stubs, possibly an accompanying letter and more.

5. Save money

While some small businesses might take cards, paying by cheque may save you some money if they reduce prices a little since they’re not paying card processing fees. If you deal with enough businesses offering reductions for non-card payments, these savings can add up over time.

It will be a while yet before the UK becomes totally cashless – and yes cheques certainly still have a part to play in financial transactions. In fact, in 2018, there were more than 405 million cheques being used for payments or to acquire cash, according to the Cheque & Credit Clearing Company.

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