What a crazy situation. I want to renew my annual Nationwide Contents Insurance policy with Nationwide but am not allowed to pay by cheque.
Every other company that I have ever dealt with will take a cheque payment but it seems that insurance companies are now rejecting this form of payment. Why so?
When I pay my bills I usually set up a standing order with Nationwide Internet Banking. I don't do Direct Debit because when things go wrong an inordinate amount of time is wasted in trying to correct matters. With D.D. you can all too easily lose control of your money.
SO I need to pay my Nationwide Insurance from my Nationwide Flexaccount, but:
I am not allowed to set up a standing order using Nationwide Internet Banking drawn on my Nationwide Flexaccount - why not?
I am not allowed to pay by Nationwide cheque drawn on my Nationwide Flexaccount - indeed Nationwide has just returned my cheque payment as unacceptable even though I have more than enough funds to meet the payment - why not?
I wont do D.D. because I do not trust this form of payment - that would be like writing an open cheque drawn on my bank account.
It appears that I am only allowed to pay by Nationwide Flexaccount / VISA debit card drawn on my Nationwide Flexaccount - er - but isn't this the same as writing a cheque?
The other issue - apart from the inconvenience - is that posting a letter of authority to Nationwide to debit my Flexaccount is FAR LESS SAFE than writing a cheque. Letters go missing - millions a year - and I would rather have the relative 'safety' of losing a cheque in the post than a letter with all of my Flexaccount / VISA card details.
What stupid and un-customer-friendly companies Insurance Companies now are - including those banks/building societies that are brokers for them.
I dont blame 'em. Many more things to go wrong shuffling all that paper,and very expensive to do.
Many more things to go wrong shuffling all that paper,and very expensive to do.
Doh! Because they made a rational decision not to accept cheques!
They probably dont have the admin systems in place to deal with cheques any more. All the mechanics of collecting them, matching them, sending them to the bank, dealing with ones that get lost in the post, bounce, et etc etc are very costly compared to sending an account number electronically. Especially as there will be an audit rail associated with it. Chances are someone did a calculation and said 'we can save X million a year if we stop acepting cheques'.
So just pay by debit card.
Can you phone them up and tell them? Or do it online? Anyway, I doubt there are many more details you would make public on such a form than on a cheque, and none that arent accessible at multiple places every time you use the card. Less than if you used the card over the phone and had to give the CCV number.
Plus, its possibly to erase the ink on your cheque and make the cheque payable to someone else for a different amount. Unlikely, but no more unlikely than people using debit card details on a paying in form. You could also argue that sending your debit details once is much safer than sending them multiple times.
Would you been willing to pay an extra 30 on your insurance, if thats the cost of dealing with each cheque, at a guess? It might be substantially higher, it depends how many people are wedded to using bits of paper to pay their bills. If you are the last one, it would be hundreds of thousands to millions of pounds just to deal with your cheque. Or would you even be using Nationwide if they were 30 more expensive?
Its a financial decision they have made, they can lower the cost of their insurance to you, or make more profit, or a combination of both.
For every person like you they might lose (extremely few), they will get more customers due to their lower costs. Or even if they dont, the savings they will make in not dealing with cheques will be more than outweighed by losing the paranoid insurance market. Thats what their calculations will have shown anyway.
And as cheques become less frequently used, often by preference amongst their customers and the number of people with debit cards increases, the cost per person that wants to use bits of paper to transfer money increases.
"...if the originator makes a direct debit claim that is not in accordance with your instructions, you will be protected by the Direct Debit Guarantee Scheme. Under the scheme, your bank will immediately refund the disputed amount to your account. All companies originating Direct Debits must be approved by their own bank before they can claim payments by this method."
Do you really think that is like "writing an open cheque" ?!
Even if the company sent *two* staff members (might get lonely on their own) down the bank to personally deposit the cheque in the company's bank account, and even if they both took a whole *day* just to do that, then it would only be a cost of "2 man-days salary" to accept the cheque.
If they are paying all their staff millions of pounds each day, then they deserve to lose business!
Think 'big picture', the cost is *far* more than the simple cost of their salaries.
Cost of employees - you've got to have at least 3 or 4 to account for training, holidays, mangement etc. lets say 3 at 100k fully paid up (to account for not only salary, but pensions, tax etc.) less than 3 people, otherwise when you phone in there wont be anyone there to help you. Cost of computer systems they would use -hardware, software, maintenance, machine rooms, environmental systems, operations. Easily several hundred k per year (I'm in the business, this is a low ball estimate, if its old systems from 5-10 years ago it might be easily cost 1 to 2 million a year to run). Cost of premises - even if sharing, there will be a cost to this. maybe
50k?
Their calculation would have said something like- Savings on 3 employees, 1.5M over 5 years. Cost on saved computer systems , 1.5M over 5 years Premises cost, 250k Opportunity cost on 3.25M saved, 325k (assume 10% ROI)
No, you just use whoever happens to be in at the time. After all, it's only popping down to the local bank with a cheque - any tealady can do that, without even any training!
"Tumbleweed" wrote
You don't need the people (/person), full-time, for the **entire year** just to pay-in one cheque (if the OP is paying annually) or twelve cheques (if they pay monthly) each year.
We're only talking about the work popping into the bank with one (or twelve) cheques each year. So likely just send someone who already does another job; actual extra cost could even be zero! [The company would just lose that person's work for less than an hour.]
It wouldn't even be enough extra work for one very part-time person!
"Tumbleweed" wrote
Eh? In order for Nationwide to accept the OP's cheque, they don't need anyone extra to answer the phone!
"Tumbleweed" wrote
This really is funny. If you aresimply collecting one (or even twelve) cheques per year, you don't need a whole new computer system just to account for it. Best solution would be a bit of paper and err ... yeh, a pen would do!
"Tumbleweed" wrote
Not in respect of the extra work from collecting one/twelve cheques. The employee will either be there already, doing a different job (no extra premises cost) or will only turn up for an hour's work, at most on the 1st of each month.
"Tumbleweed" wrote
Eh? 100K per year extra, to each of three tealadies - just to pop into the bank with a cheque infrequently (at most twelve times each year).
You're having us on!
"Tumbleweed" wrote
You've already got all the computer systems you need.
"Tumbleweed" wrote
Hehehe. You're building a new office just to house your three tealadies?
"Tumbleweed" wrote
Teehee. Outsource the job to me, and I'll take those few cheques down the bank for Nationwide for just 500K per year - there, I've saved them a cool million!!
Its a cost and risk thing. If they are cheap (which I assume they are for your cover) then the payment method they are demanding is the cheapest for them to operate. If you dont like it go elsewhere, which is fair enough, but expect to pay more.
Standing orders are far more costly to administer for the Ins Co by a very large margin and the chance of error in the reference quoted is very much larger leading to a far greater chance of your remittance being misapplied.
Not at all. If you can put forward a good business argument for a company
*needing* to spend millions of pounds just on banking a few cheques, then I'll back down. But you haven't yet.
It's different if there is the prospect of others *also* wanting to pay by cheque, but you stated: "**If you are the last one**, it would be hundreds of thousands to millions of pounds just to deal with your cheque." I don't agree at all.
Why do you think that the company *needs* an extra three full-time, high-paid employees; very expensive sophisticated computer systems; and an extra 250K spent on premises, just to accept one cheque?
If you can put forward a good business argument, then maybe I *am* a troll. If you cannot then maybe *you* are the troll!!
Not at all. If you can put forward a good business argument for a company
*needing* to spend millions of pounds just on banking a few cheques, then I'll back down. But you haven't yet.
It's different if there is the prospect of others *also* wanting to pay by cheque, but you stated: "**If you are the last one**, it would be hundreds of thousands to millions of pounds just to deal with your cheque." I don't agree at all.
Why do you think that the company *needs* an extra three full-time, high-paid employees; very expensive sophisticated computer systems; and an extra 250K spent on premises, just to accept one cheque?
If you can put forward a good business argument, then maybe I *am* a troll. If you cannot then maybe *you* are the troll!!
Apologies, I thought you actually meant what you were saying - especially after the breakdown of 3.5M!! OK, so the figure of millions was a gross over-exaggeration. I see.
The exaggeration applied to the number of cheques, not the amount. It would apply if the company wished to continue to accept cheques,assuming (as is likely) that they started with a very high percentage of cheques being paid in. It is unlikely, as the number of cheques being paid in declined, that the cost can be scaled down beyond a certain point, for example the computer systems would still need to be there, to ensure an audit trail at the very most... 'writing things down in a book' doesnt cut it these days, ask Bernie Ebbers. amd you need trained employees, if they are there doing cheques they cant be doing something else.
I dont know why you thought the employees were highly paid BTW, if they would be on 30k or so that would make the cost to the company of actually employing them, somewhere between 60-100k (industry standard is 2.5 to 3x salary)
When you said "... it depends how many people are wedded to using bits of paper to pay their bills. If you are the last one ...", it sounded very much like "taking the limit" rather than exaggerating the word "one".
But - if you really meant "one of the last ones", then surely you need to divide your total cost by that number of cheque payers, rather than taking the whole lot for each customer?
"Tumbleweed" wrote
But for *any* level of cheques, you can set up business systems which make accepting them much more cost-effective than "hundreds of thousands of pounds per cheque."
How do you think small businesses manage, when *they* accept cheques?
"Tumbleweed" wrote
The "audit trail" could simply be a suitably backed-up Excel spreadsheet. That wouldn't cost very much to administer (certainly not hundreds of thousands of pounds).
"Tumbleweed" wrote
I used to work in a medium-sized life office. When I left in the late nineties, they were still administering some very old, very small pension schemes by paper!
There were only around two-dozen of this type of pension scheme left at the office (covering just a few hundred members), and they were sufficiently different to the other millions of pensions and life policies at the office that the usual mainframe and departmental computer systems didn't work for them.
Hence, everything was done by hand on those (few) schemes - retirements, transfers, everything. We had a team of half-a-dozen technical "experts" who knew what to do when something happened, and the work only took around
2% of their time.
Paper files were kept in a couple of drawers of a filing cabinet, which included a floppy disk with an Excel spreadsheet used for the annual statutory valuation!
"Tumbleweed" wrote
Who is that?
"Tumbleweed" wrote
Agreed, which is why it is just the time that they spend on "doing" the cheques (including whenever the small amounts of training for this is required) that needs to be factored into the cost.
"Tumbleweed" wrote
I'd say that even 30Kpa for someone just to pop down the bank with a few cheques, *is* highly paid for the work involved. But anyway you said 100Kpa per person :-
"Tumbleweed" wrote
Surely that *includes* cost of premises (including heating/lighting & telephones etc etc), and also cost of "non-productive" staff eg managers(!) and tea-ladies and accountants etc etc (ie those not actually doing the stuff that the business gets paid for)?
If not, the business needs an efficiency exercise. What on earth is it all being paid out on?
Sure. I saw an analysis only a few days ago ..cost of dealing with a transaction in person at a branch office, 1, cost in an office about 50p, cost via the internet, 1p. In order to switch that transaction to the net, one of the things you have to do is stop accepting bits of paper, esp cheques. Think not about the 'happy' path when a cheque is succesfully cleared, but the hassle that occurs when it is lost, wrong amount, doesnt say who its from etc etc. This all takes time,and time as we know =money.
badly..but small volume (in terms of people & cheques) helps.
But large institutions have to be able to track payments, work out if a cheque bounced, who it was bounced by, deal with errors, follow the audit trail etc. When they have hundreds of thousands of customers and thousands of staff, that is much more difficult to do, than when you are one person and you dealt with 25 cheques a week. large businesses are also subject to much more stringent laws (in terms of enforcement and audit) on tracking all this stuff.
I have seen it in operation at our company, every year a team of about 6-10 people descend on us and spend about 2 or 3 weeks going through randomly selected sales, following it from order through to payment, bank account and into the financial accounts. Having a big box with a lot of cleared cheques in it, doesnt work these days.
And it doesnt work if someone calls in and says ' why havent you accepted my payment, to one of 3,000 people in a call centre who cant recall you from any of the other 500k customers.....they cant go and look in the book you suggested it was written down in can they! As for a start they'll be in one of maybe 10 different locations (maybe many more if they are homeworkers).....what the business needs is a system to bring a scanned image of the cheque up, associated with that account, and be able to say 'oh yes you made it payable for 14.98 not 98.14' and we wrote to you last week to let you know that.
Mr Bloggs who sells 50 widgets a week can still keep the cheques in his shoe box and write it in a book as the voukme makes it bearable and no team of accountants will check him out.
So if you had the systems in place to with with 500k cheques a year,and then the volume drops to 50k, that doesnt mean the computer systems you installed suddenly cost 1/10, they are still there, still just as expensive to run. So someone says 'look if we stop accepting cheques we can shut all that down and we could save 3 staff in accounts, 1 in computer operations, 300k a year on computer maintenance, and only lose 10,000 customers, but gain 20,000 because we can make our policies 5% less expensive at the same profit margin (or whatever, these arent meant to be actual numbers but perhaps you might get the jist of it?).
Thats probably why my pension annual update was once a year late. Companies like that will now be spending a lot of money to computerise them to deal with the nightmare of dealing with all that paper, and being able to show the schemes were being dealt with according to all the new rules and regs, such as not being a year late with the accounts.
Something that auditors are less and less likely to sign off these days.
Ever heard of Google? But if you havent heard of him, I'm not surprised you dont understand the consequences for managers who dont get things right or who are caught with their hand (in his case his entire body) in the cookie jar. He is an extreme case but its getting more common and managers need to be able to explicitly show the accounts are correct. that simply cannot be done for the sorts of systems you mention and it cant be done with a quill pen and a lined book.
Nope, go back and look at the original, I very carefully said that was the >fully paid up cost< per employee.
Depends how its accounted for but not usually, but that will be why some people use 2x and some 4x there isnt a standard for it!
The cost of administering government regulations, plus taxes, pensions, benefits, recruitment, HR departments etc.
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