Business ChequeMarket Research 2010

August 2010

2

Scope of Presentation

■ 2010 update of research commissioned by C&CCC

■ Survey conducted by Continental Research since 2008

■ Survey covers:– Writing and receiving cheques– Reasons why cheques are used– Alternatives to using cheques– Attitudes to cheques– Knowledge of cheque propositions (2-4-6)

3

Nature of the Research

■ Business omnibus survey of 520 businesses

■ Survey undertaken in April 2010

■ Northern Ireland included for the first time– 2010: Results for whole UK– 2008 & 2009: Results for GB only

■ Percentages quoted in the following slides can be considered accurate to +/- 5 percentage points

■ When comparing results for 2010 with those from previous years, a change of up to 10% from one year to the next may be the result of normal sampling variations, rather than being indicative of a real change in behaviour

Usage of Cheques

5

Usage of cheques

■ 87% of UK businesses said that they had made payments by cheque in the past month

– 2009: 89% of GB businesses– 2008: 89% of GB businesses

■ 86% of UK businesses said that they had received payments by cheque in the past month

– 2009: 84% of GB businesses– 2008: 84% of GB businesses

■ Just 5% of UK businesses said that they had neither made nor received payment by cheque in the past month

– 2009: 7% of GB businesses– 2008: 4% of GB businesses

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Usage of cheques

■ Average of 22 payments made by cheque each month by businesses

– 2009: 22 cheques per month– 2008: 26 cheques per month

■ Average of 27 cheques received per month by businesses

– 2009: 22 cheques per month– 2008: 28 cheques per month

7

Number of cheques written and received in the past month (UK, 2010)

0

20

40

60

80

100

120

£50k to £100k £100k to £250k £250k to £500k £500k to £1m £1m to £5m £5m to £20m £20m to £100m

Turnover

Ave

rag

e n

um

ber

of

cheq

ues

Written

Received

8

How use of cheques has changed over the past three years (UK, 2010)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All businesses <£1m turnover >£1m turnover

None of these

We now make a much smallerproportion of our payments by cheque

We now make a slightly smallerproportion of our payments by cheque

The proportion of payments we make bycheque has not changed much

We now make a slightly greaterproportion of our payments by cheque

We now make a much greaterproportion of our payments by cheque

Where cheques are used and their alternatives

10

Payments for which businesses use cheques

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Pay a regular businesscommitment

Pay trade supplier Other ad hoc paymentsto businesses

Pay wages and salaries Other payments toindividuals

2008

2009

2010

11

Convenient alternatives to using cheques

■ More than half of businesses think that there is a convenient alternative to using cheques for most purposes:

Use of cheques

Number of businesses in

sample identifying each use

% of those businesses identifying a

convenient alternative

Pay a regular business commitment 228 60%

Pay a trade supplier 385 60%

Other ad hoc payments to businesses

287 51%

Pay wages and salaries 110 39%

Other payments to individuals 186 55%

Note that the base size for the percentages in the final column is given by the number of respondents identifying each use for cheques, as shown in the second column

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Reasons why businesses use cheques

0%

10%

20%

30%

40%

50%

60%

Makes iteasier to

manage cashflow

Always haveused

cheques

Allows controlover who can

makepayments

Somerecipients

won’t acceptother

methods

Need to sendremittanceadvice by

post

Moneycomes out ofaccount more

slowly thanother

methods

Difficult to getaccount

details frompayees

Cheaper thanother

methods

Cheque maynot becashed

2008

2009

2010

Attitudes to cheques

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Businesses that would have problems if unable to write cheques

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010

No problems

Minor problems

Major problems

15

Preferences when receiving payment

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010

No preference expressed

Prefer cheques and ask to be paid bycheque

Prefer cheques but don’t try toinfluence payer

Don’t mind how and don’t influencepayer

Prefer not to get cheques but don’t tryto influence payer

Prefer not to get cheques and try to getpayment another way

16

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010

Disagree strongly

Disagree slightly

Neither agree nor disagree

Agree slightly

Agree strongly

Businesses’ willingness to accept cheques

53% of businesses agree that they are reluctant to accept cheques due to fears they may bounce

Cheque Propositions

18

Businesses’ knowledge of propositions(compared to T+2, T+4, T+6)

Earlier11%

Earlier8%

Correct day23%

Correct day18%

Later50%

Later61%

Don't know12%

Don't know17%

Earlier57%

Earlier50%

Correct day27%

Correct day35%

Later10%

Later11%

Don't know6%

Don't know7%

Earlier82%

Earlier82%

Correct day2%

Correct day1%

Later6%

Later6%

Don't know11%

Don't know9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Fate 2009

Fate 2010

Withdrawal 2009

Withdrawal 2010

Value 2009

Value 2010

19

Need for information about cheque clearing timings

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010

Rarely use or receive cheques

Unsure about aspects of cheques,don’t think enough clear info isavailableKnow enough, but would like betterinfo available

Enough info available

Summary

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Summary

■ No significant changes compared to previous years

■ Half of businesses believe they are making fewer payments by cheque compared with 3 years ago

■ On average 55% of businesses think there are convenient alternatives to cheques for their specific uses

■ However, 78% of businesses believe they would encounter problems if they were no longer able to write cheques