Industry research shows more than a third of small businesses still have no plans to migrate to new payments service.
The engine room for growth in the UK economy, the small business sector, is facing a trip back to the financial dark ages of paying suppliers and employees by cheque and cash, according to new research from Bacs. With just a few months to go until the migration deadline, more than one third (39%) of small businesses interviewed that know about Bacstel-IP have no plans in place to migrate to the new payments platform. In December this year all Bacstel users are required to have migrated to Bacstel-IP. Today, most UK businesses use the Bacstel payment platform for electronic transactions including payroll and Direct Debits, failure to meet these timescales could force many businesses to go back to pen and paper.
The research also suggests that the small business sector is avoiding the issue with almost a quarter of small business respondents that are aware of Bacstel-IP (22%) stating they intend to leave the switch to the last minute. One of the main reasons behind this procrastination may lie in the concerns of small businesses over finding the budget to migrate to the new service with almost a quarter (28%) of those surveyed citing this as a major concern. This is a misconception as migrating to Bacstel-IP costs as little as £40 per month.
Despite the lack of planning for the switch at the end of this year, almost nine out of ten (87%) small businesses interviewed are aware of Bacstel-IP, although the timescale relating to actual migration is less clear. Four out of 10 small businesses that have heard of Bacstel-IP are unaware that December is the date when the process needs to be completed.
Michael Chambers, Managing Director of Bacs, the organisation that is driving the initiative on behalf of its member banks said: “To date we have migrated over 45 per cent of businesses, with the current results showing an encouraging level of understanding of the deadlines involved. That said, certain industry segments are not keeping up with others in terms of adequate planning for migration, with the performance of small businesses being a particular cause for concern.”
Mike Hutchinson, Marketing Manager, Bacstel-IP added: “The small business market makes up about £500 billion of the UK’s GDP and it is vital that this crucial sector starts planning now as there are only a few months until the migration deadline. Unless companies instigate plans to migrate straight away they may well have to resort to making wage and other payments using cheques or even cash. We urge all companies to check their migration timescales to ensure they are fully prepared for migration inside the deadline. Most importantly the sooner small businesses start planning for migration, the sooner they will reap all the benefits the new service provides such an enhanced security for payment transactions.”
The Bacstel-IP platform offers businesses enhanced functionalities including electronic reporting, enabling automation of paper-based processes and same day error resolution with an opportunity for resubmission for time critical payments. Control is increased through being able to monitor payment progress and maintain contact details in real time, online. All connections are brought together into a single format, streamlining previous processes and systems and security is considerably improved.
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Notes
About the research:
The survey, conducted by the agency, Accord Research, on behalf of Bacs, took place during January and February 2005, consisting of 412 telephone interviews with the person responsible for deciding on payment processes and methods for that organisation and was split between direct submitters and indirect submitters and commercial bureaux who had not migrated to Bacstel-IP. Small businesses, those consisting of less than 50 employees, account for 24% of overall respondents.
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