Put a check on the cheques

When the euro was launched, it heralded the dawn of a new, paperless monetary system. Alan Tierney is still waiting for that dawn, more than five years later.

Indeed, with competition comes opportunity, and since 2002 we have seen an increasing supply of regular work from beyond UK boundaries. The Irish market, in particular, seems to be booming following European investment. I used to count cranes on my way around London to gauge the buoyancy of design and building work: in today’s Dublin, there are so many that you soon lose count.

However, dealing with the euro has been a learning curve with headaches. Despite it being heralded as the paperless, reduced red-tape currency, we have come up against a reluctance to put these advantages into practice. To appeal to the euro market, we quote in sterling and euros, and receive payment in the latter. But despite the system changes, our non-UK building contractors and other local clients still prefer to pay by cheque.

We soon realised that our bank could not accept these directly, but had to return them to the bank of origin before they could be processed. Dealing with large sums of our income in this way had a considerable impact on cash flow. Once we had finally received payment, we were sometimes waiting 12 weeks before the process was complete and the cheque was cleared. Or worse – on several occasions, after a wait of many weeks, we found that the cheque had been lost in transit. The bank simply agreed that the euro was not yet the easy system it was supposed to be.

It is difficult enough getting people to part with money in the first instance, let alone then having to ask for it again. So, we have had to fight against the reluctance of people to pay via bank transfer. Rather than simply writing a cheque, this requires that the payer physically goes to the bank with relevant paperwork and makes a transfer request. It puts the onus on to their shoulders, but allows us to receive payment the same day – which makes a massive fiscal difference to our business. As a supplier this can be difficult to encourage, and then difficult to implement, as payment from request to receipt often goes through various hands and sometimes on to sub-contractors.

We have found the only way to deal with this is right from the outset. All our communications, from application to invoice, now simply state that we can’t receive or process cheques. When we do receive cheques we instantly send them back and request a transfer instead. We pursue this fully at the deposit stage, and find that interim and final payments are then considerably smoother.

It is fantastic to see the development of countries such as Ireland, and we have been working with blue-chip companies moving over there into completely new offices, more recently progressing to a shift to top-end domestic work. Via exposure to international design and architectural networks, we are starting to receive enquiries from emerging European markets.

As we strive to make the most of the situation, the euro also poses the challenge of exchange rates. Although the euro does not fluctuate hugely, the exchange rate still ultimately means that we win on some quotes and lose on others.

To be competitive, we quote in sterling with a fixed exchange rate, but we can never be sure when orders will be placed and what final rate we will actually receive – this comes only when we hear from the bank on receipt of a euro transfer.

All of this has to be factored in to the bid. To win work and build relationships, you simply have to be there. It might sound obvious, but with all the technology available for remote communication, you can under-estimate the need for significant face-to-face time – especially in light of potential culture differences, however slight, and the challenges you will be faced with.

Alan Tierney is director of Spiral Staircase Systems

Tips on dealing with euro markets 

  • Talk to your bank to get advance recommendations 
  • Be strict and precise about payment methods from the outset 
  • Factor in the costs and risks of a fluctuating exchange rate 
  • Stay informed about your competition and how it operates 
  • Review accounting and sales information regularly

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