BSI Article: Better start being less sloppy

Recent weeks have brought emails and website announcements from Philippine banks, warning of imminent changes in cheque clearing practices. These are sure to have an impact on the everyday processes, procedures, and costs of anyone doing business.

And we predict these new rules will prove inconvenient and at least temporarily disruptive for many.

In brief, the new changes are as follows:

Starting on 2016 January 04, corrections will no longer be allowed on the cheque face, even if they are accompanied by initials of the signatory (PCHC Memo Circular 15-460)
Starting in 2016 March, banks will have to redesign their cheque forms in line with a new layout provided by the PCHC.
The clearing house will no longer return cleared cheques to their issuers.

Click on these links to see what some of the banks are saying on this topic: BPI, BDO, Maybank, RCBC Savings Bank, HSBC, Planters Bank.

And then there will be the inevitable, shall we say ... creative embellishments and myths dreamed up by active imaginations.

A property owner was paying real estate tax at a Makati barangay hall in early January 2016. The clerk from the Makati treasurer's office rejected the taxpayer's proffered cheque. Why? The treasurer's clerk told the taxpayer that the word "ONLY" at the end of the amount in words is no longer allowed.

The same clerk also required the taxpayer to cease rendering centavos as fractions anywhere in the cheque, whether in the amount in numbers or the amount in words. Instead, the clerk required the cheque issuer to fully spell out the centavos portion in the amount in words rendering. As for the amount in numbers rendering, the clerk insisted on a decimal point with two numerals to the right of it.

Another taxpayer at the same barangay hall complained about what he considered anal-retentive requirements. The city treasurer's clerk replied, "I'm only enforcing what our bank told us."

SURE! CheckMate cheque writing app just gained
a handful of useful new features

As of March 2016, our designers have given SURE! CheckMate several significant enhancements that increase its utility to auditors, cashiers, and managers.

SURE! CheckMate now has an available multi-user, network version.
A new authorized users table now lets the license owner assign very specifically tailored access rights to co-workers. Different authorized users can be granted varying degrees of extremely limited or unlimited access, as the app administrator sees fit.
Audit trails. It used to just print out cheques; SURE! CheckMate now produces several reports that provide a useful audit trail. These reports allow authorized financial and operating managers to trace back transactions, by keeping track of user logins and logouts. Produces a user log report, among other new outputs.
SURE! CheckMate now keeps track of cheques printed, via Check Register Reports in various formats: (1) by date of cheque, (2) by date the cheque was printed, (3) by user and date of cheque, (4) by user and date cheque was printed.
SURE! CheckMate now has a utility for purging the User Log and the Check Register.
SURE! CheckMate now has the capability to create, print, or view report text files. Text files can of course be viewed or printed via word processing and/or spreadsheet apps.
SURE! CheckMate has new utilities, including Lock Keyboard, Backup/Restore database, select printer, check disk space.
SURE! CheckMate has a built-in, user-activated online help. This tool guides new and occasional users during that brief but crucial period when they have not yet mastered their way around the app.

But when asked about these specific requirements, Banco de Oro (Reposo branch) and Metrobank (J.P. Rizal) were both confident that there were no such requirements, only that cheque faces should contain zero corrections or erasures.

So, while entertaining to talk about, made-up rules like these will increase the uncertainty and stress levels for cheque issuers and cheque recipients alike for some time to come.

Implications for you and me. In a nutshell, the new clearing rules have the effect of offloading a lot of the burdens of the checking system from the banks onto the consumers.

Consequently, in sheer self-defense, businesses and individuals who issue and receive cheques will now have to institute new behaviors, new practices, and new procedures among their back room staff. Here are some of the obvious ones.

First, since all checks deposited within the Philippine banking system need to go through the Philippine Clearing House Corporation (PCHC), this means that ALL banks will be changing their practices to comply.

And that in turn means that anybody who issues cheques is also affected willy-nilly. For example, by March 2016, everyone will have to purchase newly redesigned cheque forms. This will have obvious costs.

Banco de Oro says that the old cheque forms can be "used until further notice." So does Metrobank. But is this "further notice" going to come down on all our necks in March 2016, as the PCHC policy announcement states?

Or will the banks allow customers to exhaust their current supplies of the obsolete cheque forms? Some sort of grace period extending beyond March 2016 is possible, even likely, given the Filipino culture of pagtawad and pagbibigay.

But keep in mind that there will be little old ladies out there who issue maybe one cheque per month, who will then take forever to exhaust their booklet of 100 cheque forms.

It would seem inevitable that the banks will clamp down at some point not too far into the future; they can't afford to wait for everyone to exhaust their old cheque forms.

Second, the new rule requiring zero corrections on the cheque face means that, if you're a cheque issuer, each mistake will cost you (at least) the price of a cheque form. At today's rates, that's around PhP3.50 per cheque.

There's of course no assurance that the cost of cheque forms will stay the same after the new design and cheque size go into effect, so the cost of waste could go higher.

Then there's the penalty for issuing a defective cheque. As you can see, corrections on cheques now fall into the category of "defects."

Click here to continue reading this article online.