Back office practices hide £billions in potential cost efficiencies, according to Bacs

Businesses and the public sector are being urged to look at low impact options to find cost savings before considering cuts. According to Bacs Payment Schemes Ltd, Direct Debit was responsible for up to £3 billion worth of efficiency savings for UK businesses in 2009 alone; the not-for-profit organisation says local and central government, as well as the hard hit private sector, should first look to make savings through changing expensive existing back office practices, such as costly paper-based payment methods.

Some public sector bodies have already realised substantial cost efficiencies through automating payments, demonstrating the savings that could also be achieved in the private sector – a joint campaign among just 20 local authorities in the spring netted almost £0.5 million in annual savings. Replicated by all of the England’s local authorities, that saving could amount to £8.7 million every year.

Mike Hutchinson, head of marketing at Bacs, said: “The £3 billion worth of cost savings made through the efficiencies of Direct Debit last year demonstrates the valuable contribution that automated payments can make in helping fight the country’s deficit. 

“We urge businesses and the public sector to look closely at where they can find cost savings that have as little impact on their core services as possible. Direct Debit is just one option where there are savings to me made which cause as little pain as possible, simply by moving away from more expensive payment practices.”