TechnologyUtilities urge switch to BACS

Utilities urge switch to BACS

Business leaders need to urgently address the move to BACS' new internet-based payments service to avoid putting their companies at risk, according to the utility firm Northumbrian Water.

The utility company’s financial systems programme manager Richard Moss has warned that while migration costs are relatively small, there are significant implications for a company’s cash flow if anything goes wrong.

‘This is something that could stop a business in its tracks,’ said Moss.

BACS has issued a December 2005 deadline for all firms using its service to switch to Bacstel-IP, while companies using its X400 messaging service – a secure electronic delivery product – have to make the switch by next March.

Failure to comply with the new standard could result in firms being unable to pay staff or collect direct debit payments from customers.

Moss urged senior managers to get involved with the migration process rather than passing it on to someone in the IT department to take care of.

‘I think a major worry about this is the extent to which this has been delegated to junior staff. This is something that needs to have senior people involved,’ Moss said.

About 100,000 UK companies will be affected by the switch to Bacstel-IP.

Northumbrian Water is entering the final stages of its migration to Bacstel-IP and plans to be finished by August.

The project is scheduled to take about ten months, but Moss conceded that it could possibly have been completed in a shorter timeframe.

‘You could probably do this in six months, but it’s hard to do an effective procurement process in a short time. If you did it quicker, it would probably have a bigger business impact.’

The firm is using software from Eiger Systems, which manages the process of creating, authorising, and verifying its Bacstel-IP payments.

But with an X400 messaging service, the company has to ensure that it will be fully up to speed before the March 2005 cut-off.

‘As a utility, we have a major job to get ready for issuing bills in the first quarter of next year, so as an X400 user, we needed to get this project going even faster,’ said Moss.

The scale of the firm’s operation highlights the importance of the project: it employs about 2,500 staff, deals with 5,000 suppliers and provides services for about two million customers.

Adrian Stafford-Jones, MD of BACS software provider Albany, recently told Accountancy Age: ‘The reality is that not many companies have gone through with changing their software.’

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