The introduction of a new system of time limits for clearing cheques has been welcomed by small businesses today.
The 2-4-6 system, which comes into force from November 30, gives banks a maximum number of working days for each stage of the cheque clearing process – two days for interest to begin to accrue, four days for money to be made available to withdraw and six days final clearing.
The changes are part of the new Banking Code, which is being fully implemented in March 2008, and will be monitored by the Banking Code Standards Board.
The Forum of Private Business (FPB) said it was good news for small businesses that rely on customer’s payments to cover their outgoings.
The FPB's, national chairman, Len Collinson, said: “For the first time, smaller firms have been assured that their money will be safely in their accounts within six working days.
“This will enable them to be more assured in managing their cash flow with a far greater degree of clarity.”
Adrian Ingham, runs Aqua Blue Seafoods in Westbury, Wiltshire. He said he had experienced problems with clearing cheques in the past.
He said: “I find cheques to be a pain at the moment because the time it take for them to clear can vary. Also, the money can appear in your account as a credit, when it actually hasn't cleared at all.”
“I know of a couple of instances where scams have benefited from this. A time limit will certainly help. Anything that simplifies the system and puts more safeguards in place for businesses is welcome.”
© Crimson Business Ltd. 2007
