Britain’s workers are bankrolling their bosses as UK companies owe employees a massive £258 million (1) every month in staff expenses paid by cheque.

New research from Bacs Direct Credit reveals 1.7 million workers have their expenses paid by cheque with more than a third (36%) of SMEs refunding expenses in this way.

With the average expense cheque reclaimed totalling £152 per person, a month, and an employee typically waiting up to four working weeks (2) to receive and bank their payment, UK workers are losing potential interest of up to £4 million (3) each year as they wait for bosses to reimburse them.

More than two thirds (69%) of this four-week time delay is directly down to employers who take an average of 18 days to reimburse a member of staff with such costs.

And as a result of waiting for their expense cheques to be paid over a third (37%) of employees find it difficult to pay their bills from time to time.

Once a company has issued a cheque to a member of staff, it then takes an average of eight more days for an employee to cash it. Of the UK’s time-harried workforce who are paid their expenses via cheque, 68% admit to further delaying the process because they are unable to get to the bank.

Michael Chambers of Bacs, the company responsible for Bacs Direct Credit said: "It is already common practice for UK businesses to pay their employees’ salaries through Bacs Direct Credit so it would make sense to use it to pay their expenses too."

"Companies reimbursing staff expenses via cheque not only increase administration for their accounts departments but risk alienating staff - over two thirds (67%) of those claiming expenses would prefer being paid by Bacs Direct Credit."

Bacs Direct Credit enables transfer of money into a bank account within days rather than weeks ensuring secure, hassle-free payment for an employee - 62% of workers who are currently paid expenses via cheque would feel more valued if they were paid such costs directly into their bank account.

For more information about Bacs and our services visit Bacs key facts.

Contact Bacs press office.

Notes
(1) This figures has been calculated on the basis that there are 23.8M adults in employment within the UK (source: National Statistics Online, May 2004). The survey commissioned by Bacs that 6% of all GB workers are reimbursed their expenses via cheque (1.7M) (i.e. 28.3M x 0.06). The average amount of monthly expenses claimed by a cheques is £152. (£152 x 1.7M = £258M)
(2) From the survey it was found that it typically takes an employer 18 days to refund staff expenses. On average, it then takes an employee eight days to pay this check into their bank account. (18+8=26). It therefore takes 26 days to cash their expenses (26 days = four working weeks)
(3) Working under notes to editors.

Lost interest calculation
This figure has been calculated on the basis that there are 23.8M adults in employment within the UK (source: National Statistics Online May 2004). The survey commissioned by Bacs found that 6%of all GB workers are reimbursed their expenses via cheque (1.7M) (i.e. 23.8 x 0.06). The average amount of monthly expenses claimed by cheque in the UK is £152. (£152 x 1.7M = £258M). The average wait to cash an expense cheque is 26 days.

Interest has been based on a gross rate of 1.7% (average rate gained through current gross interest rates provided by Barclays - bank account 0.1%, Halifax - current account 3%, HSBC - premier bank account 0.1%, Lloyds TSB - classic plus current account 4.89%; Natwest - advantage premier 0.5%) Mean interest rate: 0.1 + 3 + 0.1 + 4.89 + 0.5 = 8.59/5 = 1.7%).*  The following lost interest can be calculated if everyone benefited from one of these accounts. (1.7% - divided by the 365 days = 0.00005%. 26 x 0.00005 = 0.0013. (0.0013 x £258M = £0.34M). Annual figure = £0.34M x 12 = £4M

*All interest rates correct at 27.07.04 source: moneysupermarket.com

The research
Figures are drawn from two surveys commissioned by ABCS Payment Schemes Ltd
1. Fieldwork conducted May 2004 by RSGB Taylor Nelson. The survey provides 2,000 completed face-to-face interviews investigating how the UK workforce claim and regard staff expenditure. The data is weighted to be representative of the GB working population
2. Fieldwork conducted May 2004 by Continental Research. The survey provides 366 completed telephone interviews with Managing and Financial Directors within UK companies with an annual turnover of over £50,000 and up to 250 employees. The interviews investigated the processes employed by their business to reimburse staff costs. The data is weighted to be representative of the 1,128,000 UK companies with a turnover of over £50,000 (as estimated by the Department of Trade and Industry).

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