Cashflow concerns see ICAEW Council vote down 'subs-by-instalments'
Institute votes against creating a direct debit scheme for members to pay their subscription in instalments
CASHFLOW CONCERNS have caused the ICAEW’s Council to vote against the introduction of a ‘subs-by-instalments’ scheme.
The scheme was intended to enable ICAEW members to pay their subscription fee in instalments. Council votes were 26 against and 21 in favour of the plans that would have been introduced for 2015 subscriptions. The four instalments, due to have been paid between January and September, were to be made via direct debit.
Described as a “robust discussion” by an ICAEW spokesman, the council voiced concerns about the impact the scheme would have on its cashflow situation.
In the ICAEW’s risk analysis of members moving to instalment payments, the institute’s average £20.7m cash balance would fall by £2.5m if 50% of its members join the scheme. It would also lose £13k at current interest rates.
The potential for bad debts and write-offs through part-payment of subscriptions is relatively low, the ICAEW had suggested in council papers. A shift of members moving to direct debit payments away from credit cards would also have reduced the ICAEW’s bank charges, it added.
However, some council members warned that if more members took up the instalment scheme than predicted, coupled with the cash that can flow out of the ICAEW if the FRC opens up big investigations, could put a drain on the institute coffers.
Secondly, they flagged up that the institute has a current instalment scheme, one which requires members to sign a credit agreement with the finance provider and is only used by 100 members annually.
The membership fee is rising to £340 for 2015, from £330. Renewal notices will go out in November.
“We consider the modest loss of investment income to be an acceptable cost of providing this significant member benefit, particularly as operational cash requirements are maintained and we are protected from the impacts of higher interest rates by the additional income achieved on the main balance,” the institute had stated in its papers.