Havoc due as SMEs miss deadline

Thousands of SMEs have still not announced plans to migrate to the new
internet-based BACS system, putting at risk payroll runs and payments to
suppliers in the new year.

With just two weeks left before the old BACS system is switched across to
BACSTEL-IP, latest figures have revealed there are still around 3,500 businesses
that have not decided upon plans to switch to the new system, despite warnings
from software providers, payroll bureaux and banks that failure to do so could

force businesses to manually pay staff and creditors.

The current BACS system will be switched off on 31 December 2005, and users
are required to switch to the new online system, BACSTEL-IP, before the deadline
­ or risk direct debit or payroll failures.

Companies running BACS on a weekly basis in the new year could see their
payroll run during the first week of January fail.

Mike Hutchinson, BACSTEL-IP marketing manager, who has spent the last four
years encouraging business to switch to the new system, said that the remaining
companies left to switch would have been contacted on ‘numerous occasions’ by
their banks about the changeover.

‘They would have had withdrawal of service letters from their banks,’ said
Hutchinson. ‘The doomsday scenario is that businesses will have to revert to
cash and cheques,’ he said.

He urged those left to switch that it was ‘probably’ too late to receive even
a very basic switchover before the end of the year, but payroll bureaux could be
used for an interim period to provide the service.

‘It may even be worth talking to the software suppliers,’ he said. ‘They must
also talk to their banks, which might help the businesses tide over.’

Despite his concerns, Hutchinson said that BACS was ‘absolutely delighted’
that more than 100,000 businesses had already migrated to the new system.

Georgia Leybourne, a director at Albany Software, reminded the struggling
businesses to register their intent to migrate with their bank, before looking
for a
quickfire plan to switching.

‘If they’re registered with a bank we can run payroll for them. There is an
escape route,’ Leybourne said.

‘The banks simply will not undertake transactions if the firm has not been
converted to BACSTEL-IP,’ warned a Forum of Private Business spokesman.

One of the main reasons behind the switch to the new internet-based system
was that the old BACS technology could not deal with the ever-increasing number
of transactions that ran through it.

Hutchinson predicted that the number of transactions BACS dealt with would
increase from four billion transactions to five billion within two years.

Payroll bureaux had until the end of June to prove they were planning the
switch to BACSTEL-IP.

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