Cheque clearance times, Is delay a good thing?  

kitchenfun1234 45M
2103 posts
7/8/2006 5:38 am

Last Read:
7/17/2006 11:02 am

Cheque clearance times, Is delay a good thing?

After the question of "What's my balance and what can I spend?" that people ask their bank, here in the UK the number two question is regarding cheque clearance.

That is, when a customer of the bank receives a cheque as payment for something they run to the bank to deposit it and want to know how quick they can start to spend the money.
As I understand it in many countries the money is transferred from the payers account to the payee on the same day. But in the UK cheques take a lot longer to clear.
The standards are something like.....
Same bank/branch customer to same bank/branch customer= same day transfer, (Within limits).

Same bank customer to same bank but different branch = 3 days, (Again within limits).

UK bank to UK bank= 5 working days

UK bank to Scottish/Irish bank and vica versa = 7 days (This varies so much....minefield!)

UK bank to Non-UK bank and vica versa = Don't go the Americans say.

The reason is a broad lack of standard systems between the financial institutions. Many banks are running legacy systems that were developed as bespoke products years ago and they are simply unable to communicate with other systems automatically.

Slowly these systems are being replaced which means faster cheque processing times. Good if you have been paid by cheque because whilst your balance will reflect a cheque deposit on the day you pass it to your bank, the available balance will not change until the money has passed through the clearing cycle.

At the moment a cheque is an old fashioned way of appearing to pay.....but knowing that you still have a day to get the money yourself if your account is empty. Many business customers use this to their advantage because the longer money remains in their account the better for interest etc.

Bank to Bank transfer via CHAPS (Clearing House Automated Processing System....for transactions like buying a house),or Bank Giro Credit is quicker but businesses resist it because they know how quickly their house of cards would tumble if they had to pay on time.

I spend my day listening to customers complaining about the delay in clearing the funds for a cheque payment. Customers who in the same call will often enquire about cheques they themselves have issued based on fund availablility and delays in the clearing time.
The banks are damned if we change the system and damned if we don't. Funny old world isn't it?

Don't ever give up searching for the fun in life.

EyeCandy33333 45F
761 posts
7/9/2006 12:14 am

Well-I worked at a bank-so I do understand both sides.If possible-take the check to the bank it was drawn on and get the funds-then put the money in your bank.Or you can deposit the check and wait-but clearly the bank has to be certain the check will be good-they could contact the other bank (but the funds may not be there when the check clears)or send the check for collection-but then fees would be involved.There is so much fraud and bad check debt I suppose as the reason for all this.

kitchenfun1234 45M
1797 posts
7/9/2006 6:03 am

EyeCandy33333 Thanks for that. Hmmm well yes, here in the UK a cheque can be specially presented by your bank. For £10 the customer gets a same-day answer about the funds being available to pay the cheque. The amount of the cheque is also earmarked on the payer bank to prevent it being spent twice. However for a lot of cheques that have a value less than or close to £10 the customerss hate to pay the special presentation cost.
Cheque fraud does happen but the usual reason a cheque bounces is because the person who wrote it did not keep a note of what they had spent.
So many people rely on their bank balance to tell them what is available to spend without taking account of what cheques have cleared.

Don't ever give up searching for the fun in life.

EyeCandy33333 45F
761 posts
7/17/2006 5:26 am

Exactly-balance the check book -lol-Checking 101!It works!

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