This is a series of Q & A interviews with Nicki Kinton of NK Credit Consultancy in which PPD is looking at the typical excuses that suppliers often hear when chasing late payments, and asking Nicki how best to handle them.


Excuse #6 – Currently in the process of switching bank accounts


Really? How often does this happen?

It does happen, and more so these days with the BACS Current Account Switch Guarantee for individuals and small businesses ( under 50 employees and Turnover not exceeding £6.5 million).


Switching bank accounts sounds like an administrative quagmire, how long does it take to complete the process?

Since 2013 the major banks have all agreed to complete a small business bank account switch within 7 days. Small businesses can use the Current Account Switch Service managed by BACS and the new bank manage it all for you (there’s some form filling to do before hand). There should be no loss of access as the new account is opened prior to the switch date and everything transfers on that date.

For larger businesses the process should be very similar but without the Current Account Switch Guarantee and may a little take longer if they have a number of accounts and processes, such as direct debit, to move over.

Because the new bank account is set up before the old one is closed businesses can ask their customer to pay into the new account before the switch takes place, whilst all their payment data is still attached to the old account until the switch date.  This has implications for being able to make payments if funds are going into a different account and could be the reason for any payment delays.

Also, whilst the process with the bank may be relatively straightforward, sometimes updating antiquated legacy systems to interact with the new bank can cause delays.


Surely switching bank accounts can’t be an impediment to cashflow otherwise it would affect incoming funds as well as outgoing funds wouldn’t it?

As mentioned above, cash inflow isn’t a problem if you’ve informed your customers of your new bank account. For the small business switches, the old bank will automatically transfer receipts made to the old bank account after the switch date. For larger businesses they will probably need to keep the old account open for a period to capture any customer payments that are still made to that account and manually transfer.

Switching accounts shouldn’t delay payment for more than a few days. If you are being told otherwise either it’s all gone horribly wrong (unlikely) or they’re stalling.


What can a supplier counter with when faced with this explanation?

This is always a difficult one and really depends on the relationship you have with the customer and their value to your business.

You could suspend any future work until the situation is resolved and you should remind your customer of any late payment penalties.

Consider requesting a credit card payment. That has no impact on the bank account (until they need to pay the bill) so should still work.

If you’re prepared to wait then ask your customer for the exact date the switch will be complete and arrange a date for payment. As mentioned above, this should be no more than a few days.



NK Credit Consultancy Ltd offers a complete credit management solution for your business covering all the core competencies including due diligence / designing credit policies / designing terms of business / improving the accounts receivable process / ensuring compliance with consumer credit regulation and Credit Insurance Policy / establishing reasonable credit limits and payment terms and more. To contact Nicki click here.