Why are you still using cheques?
It can’t be because they are expensive, or a hassle to get two board members to sign. It can’t be because your vendors enjoy chasing you down and maybe even intercepting you before it hits the postal box. So then why do you still use cheques?!?
A 2019 Report by the Canadian Bankers Association revealed that ‘88 percent of Canadians trust their bank to offer secure digital banking services, and 85 percent feel confident about modern banking technologies.’ Yet there you are, signing pieces of paper until your fingers are raw, combing through paper invoices ensuring everything matches up.
Before working in the Condominium Industry, I worked for a large retailer. There, I was able to learn a slew of systems and procedures that became a part of my every day. The one I enjoyed the most was the payment system we used to pay vendors. In the 2 years that I worked there, I signed ‘1’, I repeat ‘ONE’ cheque, and it was a hassle I care not to repeat.
A payment system, or Electronic Funds Transfer (EFT) system, is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff. Mark my words, EFTs will replace cheques like plastic replaced cash.
While preparing cheques, I said to myself, ‘there has to be a better way.’ So, I vetted out a company that provided this service to Condominiums Corporations. I pitched the idea, but it had about as much traction as a chainless tire on Highway Thru Hell.
Then the first COVID wave hit.
That is when we adopted a company policy that mandated the use of an EFT System for all our Condominium Corporations. Back in March of 2020, most saw it as a temporary solution to a temporary problem, well, we know better now.
I am sure you all have your folder, whether it be manila or otherwise, that has the weeks/months/years worth of invoices and their corresponding prefilled cheque for you to throw your John Hancock on, and I am sure that the folder has never gone missing. But unless you are taking photocopies of each invoice, which I hope you are not, that is the last time you will ever see those pieces of paper. Furthermore, only the one or two board members that sign the cheque will know how much or who was paid in the last ‘batch of cheques.’
EFT system to the rescue.
Since EFTs are all done online, it means it's accessible everywhere and available to anyone you are willing to share the keys with. Payments Canada, which oversees Canada’s Payment infrastructure and is mandated by the Canadian Payment Act acknowledges that ‘Cheque use is steadily declining as electronic alternatives gain in popularity, but Canadians still use close to a billion cheques each year.’ So, are you going to be a part of the last 500 million? 100 million? million?
So how does an EFT System work for a Condominium Corporation?
1. Invoice Submitted Electronically
2. Invoice coded to proper General Ledger Account
3. PM Reviews (If applicable)
4. 2 or more Board Members Approve
5. Invoice Posted and Paid
The best part is that it is stored online, and non-signing authority Board Members can see all payments, whether they be paid, pending, or rejected. And to take transparency to the max, future Board Members can see past invoices and your auditor will never ask you to send them a copy of that invoice from XYZ Inc. because you can give your auditor the key!
We have talked exclusively about the plus sides of EFTs and their systems. What about the negatives? The negatives through my biased eyes are only education and adoption. Similarly, to when debit cards were introduced, and people had to be enticed to go to the ATM over their good ol’ friend Mr. Bank Teller. ETFs too must be taught and explained so that there is the same amount of comfort in the new way as there was in the old.
Peter Debrone is an Accounting Specialist at Weigel Property Management and Owner of Debrone Bookkeeping Inc.