PAYMENT BY ORDER.

New Zealand Herald, Volume LXVII, Issue 20722, 15 November 1930, Page 13

PAYMENT BY ORDER.

SAVING IN CHEQUES. PRACTICE IN ENGLAND. LITTLE FAVOUR IN DOMINION. The practice of making payments through orders on a bank now being approved by some of the large banks in England is not in use in New Zealand to any extent, according to bankers and business men with whom the system was discussed yesterday. The practice referred to has been followed for some years in England by large firms in making salary payments, and it has been employed by individuals for making regular payments, such as club subscriptions. Under this system the debtor authorises his banker to make to the creditor's banker certain regular payments until further notice, and these payments are covered by one cheque drawn on the debtor's bank. Of course, both debtor and creditor must possess banking accounts and mutually agree to this form of remittance It is claimed that there is a considerable saving of money and labour by this means, the saving being in cheque stamps, the cost of postage, the absence of a receipt stamp and in the work entailed in posting individual cheques and receipts. Large industrial enterprises are said to be adopting the idea more widely in England. Convenience o 1 Cheques. Auckland business men who were consulted yesterday could see very little advantage in adopting the system in this country. It was agreed that the cheque habit was very convenient and facilitated business. Thp method of giving orders on the banks if adopted would necessitate a change in book-keeping arrangements. In any case, it was difficult to see what industries . would have such regular payments that they could be provided for by ail order covered by one cheque, as in general business practice payments varied from month to month according to commitments.

The method might be possible of adoption with regard to such payments as interest, rents or salaries which were usually of a fixed amount, but even with salaries it would be found that few employees had bank accounts so necessary to the practice. It was to be expected that the banks would charge a commission on payments made in this manner, as was being done in England, and it was felt by the Auckland business men consulted that this commission would offset any saving or benefit likely to be derived. Attitude of Bankers. Bankers who were asked for their opinion on the system could see very little in its favour as far as New Zealand was concerned. They showed that every transaction passing through their hands had to be based on a cheque and a departure from this practice would call for the setting up of a new department within their institutions, with consequent additional expense which would have to be charged for. An official of one bank mentioned a departure from the usual practice permitted by the banks which bore some resemblance to the method gaining vogue in England. Certain large companies in making dividend payments save themselves considerable trouble by giving the bank one cheque covering the dividend payment to their shareholders, who are also clients of the same bank. With the cheque they supply a list of the shareholders and the amounts to be paid to each. This method suits the convenience of tho bank, as it has but one cheque to enter, as against perhaps 200 in the case of some large companies. The appropriate amounts are credited to the accounts of the individual shareholders in just the same way as if 200 separate cheques had been lodged.