FEATURE INSIGHT
Payments – routes of a necessary evil
Jerome Smail, freelance journalist, discusses and explores payroll’s payment delivery methods
A s we in the industry know only too well, delivering payments – whether in the UK or globally – is a complex business. Payroll professionals need to negotiate an ever-changing landscape of legislation and compliance. Essential, of course, are the payments systems used for delivery, such as BACS, faster payments and CHAPS (clearing house automated payment system), to name but a few. So how important is it for payroll professionals to make themselves familiar with these various interbank systems in order to serve their employer or client base? Very important, according to Jason Davenport, vice chair of the CIPP: “Frequently, a request may be made by or on behalf of an employee for a particular type of payment to be made, such as CHAPS, without realising the options available, the time available and the cost to the business of each type of payment approach. Being aware of the different approaches allows the payroll professional
to be seen as a trusted advisor, adding value to the situation faced and potentially saving the organisation time and money.” ...payroll still needs to remain flexible when it comes to delivering payments... Michael Hughes, bureau manager for Cintra HR & Payroll Services, agrees that such familiarisation is important: “As you know, the biggest mistake we can make is missing a BACS payment. Therefore, it is essential to know what back-up options you have, such as faster payments.” Michael’s colleague, Ian Holloway, head of legislation and compliance at Cintra, adds: “CHAPS has generally been seen as the fall-back option, especially when it comes to critical or urgent payments that have to be made in real time. Despite the
fee that banks will impose, CHAPS is still regarded as the secure real-time payment method and may be the only method available where the payment is large and not accepted by faster payments.” Simon Parsons, director of payments, benefits and compliance strategies at SD Worx, agrees that “familiarisation with CHAPS is useful for emergency payments”. However, Hughes points out that the availability of faster payments and the introduction of internet and online banking mean there is less reliance on CHAPS, “which is, of course, also more expensive”. Davenport notes that innovation has also led to higher expectation. He explains: “There was a time when all banking was handled face to face. The growth in ATM [automated telling machine] capability made the finance industry one of the first that was accessible 24/7. The use of telephone and internet capability supported that reach even further and this has led to an expectation that payments can be made immediately. “Payment delivery systems have
| Professional in Payroll, Pensions and Reward | October 2018 | Issue 44 48
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