Financial advise
The cheque is out
Soon to be made redundant, the loss of the cheque doesn't have to be problematic for franchisors, as Graeme Jones reveals
The Cheque Guarantee Card Scheme will be closed on 30 June 2011. This decision was taken as guaranteed cheque use is in terminal decline - no major UK supermarket chain now accepts cheques.
Cheques have been around for more than 350 years, so how do you prepare your franchise system for the changes that are coming?
Get paid directly
This is done via Bacs and known as direct credit - benefits include:
- Spending less time handling and banking cash and cheques
- Payments arrive instantly - earning you interest or reducing the level of interest paid on your overdraft
- It's more secure
- It's more reliable - typically, businesses using direct credit pay earlier
- Getting paid in this method is simple, simply ask!
Your customer benefits from saving time and administration costs, and it reduces the amount of time spent on reconciliating their payments. You can find out more at the Bacs internet site located on http://www.bacs.co.uk/Bacs/Consumers/BacsDirectCredit/Pages/default.aspx
Accepting card payments
Increasingly, customers are reaching for their credit and debit cards to pay for even low value items as people are carrying less cash around. Benefits include:
- There is a link between card payments increasing average transaction values
- Time at the till can be reduced - good queue management can drive existing spend and may even attract new customers
- Goods can be taken or dispatched straight away
- The best service providers will provide vigilant security screening processes to protect against potentially fraudulent transactions
- Cards acceptance enables business to be conducted on and offline.
Cash
There is still a very substantial amount of bank notes in use, with more than £48 billion pounds worth of notes in circulation. There are some disadvantages, however, to accepting cash:
- Potential for fraud (although technology can help)
- Potential for theft
- Time and cost of reconciling and banking
Flexibility is required in terms of the types of payments your franchise accepts. As a franchisor you may well be able to use the size of your franchise network to obtain cost-effective payment solutions. It is also very important that any payment solution provider you choose can demonstrate high levels of reliable service. If you approach this opportunity to change the way you do business you should create a more efficient and profitable franchise network.
Graeme Jones is the head of franchising for the Royal Bank of Scotland Group. You can contact him on 0800 092 9117 or email franchise.retailbanking@natwest.com
