Monetary Auth of Singapore Most small businesses still use manual cheques
I sent an invoice to a client. The manager handed me a cheque. It was signed by two signatories.

I had to visit the bank to deposit the cheque.

Can you imagine the work that had to be spent by all the parties to make this payment?

The manager had to get the two signatories to approve and sign the cheque. As the two signatories are not working full time at the office, how much work is required to coordinate and obtain the signatures?

The manager had to meet me and hand over the cheque. He could send it to me by post, and face the risk of it being lost. 

I now have to make a trip to the bank to deposit the cheque. If my staff does it, it will take office time (maybe 2 hours or so), and the staff is paid a high wage cost. As the director, I work for free.

In my invoice, I had requested that payment be made by bank transfer into my company's bank account or by PayNow. 

The manager said that they did not have the ability to use the electronic payment.

I can understand why.

The bank and the MAS, in their zest for security, made the process too difficult. It would be a big hassle just to register the signatories. After that, the process required by the signatories to login to the platform and give their approval would be a nightmare.

I know. I have tried it.

So, many small businesses continue to use manual cheques. And the country called Singapore continue to be wasteful, inefficient and incur high business costs. 

Yes, I am talking about one cheque. Do you know how many cheques are used every day in Singapore. 

I searched Google. I had a difficult time locating this information. I still could not find it, after a lot of effort. 

I did find a MAS paper that stated that 78 million cheques were cleared in 2009. That works out to 231,000 cheques every day in Singapore (including non-working days).

This number may have reduced over the past 11 years. By guess is that the reduction is not much.

How much does it cost the country to clear a cheque. I guess, if we take the work of all the parties involved - the issuer, receiver and the banks, it must be $2 to $5 per cheque. 

If I take $4, the cost to the country of processing 78 million cheques a year is $300 million. If it reduces by 20% over the years, it is still $240 million.

What can be done to encourage more businesses to use e-payment? MAS, go and talk to the SME. Talk to me.

I will tell you what needs to be done. You have to know what is happening and why businesses continue to use cheque. You have to get the banks to improve their systems to facilitate payment by businesses.

Monetary Authority of Singapore - are you listening?

Tan Kin Lian
 

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