The Gabem Umbrella Companies Blog:
Home of Umbrella Company Gossip Online
2nd July 2010: The Faster Payments Service and Umbrella Companies
The faster payments service was introduced in May 2008 to less fanfare than it really deserved, because it sped up the transfer of BACS payments from 3 days to the same day. This effectively made BACS obselete and CHAPS an expensive luxury for large transactions. For umbrella companies, especially the smaller ones it was a hugely beneficial step because it means they could compete more readily with the big companies, all they needed to do is be with a bank that can send monies via that medium.
It also wasn't just a case of getting money to contractors quicker but, in many cases, the payments coming to us from the agencies were also sped up.
When the most time intensive, and critical part of your business is matching payments to invoices, suddenly finding that you have both sides of the information earlier is a huge bonus. Before Faster Payments were introduced we relied upon a service our bank provided that would give us a forecast of the payments coming into our account and would act and pay out on this before the money came in. Not every umbrella company had this advantage because they didn't have the benefit of being as big as us.
Faster payments has also made fixing errors (no matter whose they may be) much easier, because again it can all be sorted the same day, no big administration charges from the bank, no reason for any charges to come from the agency (because it was a simple standard transaction) and no delays. In some circumstances it was even better than a CHAPS payment, because faster payments can be made right up until close of business and they will clear.
I think I've made my views on umbrella companies charging for CHAPS clear over the last 2 years and I'm not going to go on about it now, but faster payments are absolutely the way forwards because it gives your umbrella company more time to act, chase up any inconsistencies and generally do a better job while in many cases costing you less money. It just helps provide a better service.
Hugo
@GabemUmbrella
02/07/2010
