It’s often well documented in the media when large companies suffer a disaster – be it due to a power cut, lost laptop or burglary. Jo Gibson, operations director at Payment Bureau First Capital Cashflow, explains why businesses of all sizes need a robust contingency plan in place, particularly when it comes to making sure payments are made on time, every time.
Many smaller and medium-sized businesses are taking huge risks by having no contingency planning in place, meaning that if an unforeseen disaster occurred, they would have no protocol to deal with the issues and ensure customers, suppliers or other stakeholders aren’t affected.
As technology advances, the potential for a disaster to occur and the potential consequences of a disaster situation, are even greater. So, it’s more important than ever that comprehensive contingency plans are put in place.
One of the most important processes any business completes is processing payments – missed or late payments can be catastrophic for a business – particularly businesses that don’t have large cash reserves and rely on a positive cash flow.
Moreover, any business using automated payment methods such as Direct Debits or Direct Credits, is legally responsible for collecting and making payments on a set date each month. Bacs, the organisation behind the clearing and settlement of UK automated payment methods, Direct Debit and Direct Credit recommend all users have a contingency plan in place. Failure to do so could land them in a very sticky situation with customers, staff and suppliers.
There are a variety of situations that could lead to a business being unable to operate as usual, many might seem small, but can have lasting consequences.
What can cause a disaster?
One unavoidable scenario is a natural disaster. Fire, floods or even a simple power cut can leave a business unable to meet their obligations to customers. In this situation, a business could be unable to function as normal for an unknown amount of time, from a few hours to days or even weeks. Information, computers and software might be damaged beyond repair. It is vital that a company has a process in place to ensure critical processes such as payments, can continue.
Another more common occurrence is staff sickness, staff holidays or lost smartcards (used to login to banking systems and computers in some businesses). These simple situations can cause major problems, particularly in smaller businesses where only one person is responsible for processing all financial transactions. Moreover, they always seem to occur on the worst possible day!
Burglary can also detrimentally affect a business’s ability to function as normal, particularly if information is saved locally on an individual computer, rather than on a shared server or the cloud.
Cyber-attacks are another cause of major problems for businesses. Hacks and data breaches at large organisations are now well reported in the media. But small and medium-sized businesses are also vulnerable – especially now that large organisations are beefing up their security. Viruses can completely wipe computers or lock files, preventing access to vital data. In this situation, it is imperative that businesses have a back-up plan to ensure they can still access essential information and keep vital processes going.
While not an exhaustive list, these are some of the most common disasters businesses suffer. It’s worth noting that, any disaster is more acute if a business uses locally deployed software which is not accessible remotely.
How to plan effectively
While these scenarios are all very different, the process of contingency planning is largely the same.
A business’s owner or senior management team need to sit down and work out exactly which processes it absolutely cannot afford to stop in the event of any disaster – regardless of what the disaster is. They then need to devise a comprehensive strategy to continue that process in the event that a disaster occurs. The specifics of the contingency plan will vary dependent on the process, but options include:
Outsourcing to trusted partners/ experts
Working remotely using cloud-based systems
For example, almost all businesses need to continue to process payments will be essential whatever emergency situation arises.
If a business in locked out of their automated payments software, be this because of theft, damage to computers, cyber-attacks or because of simple human error, they need to speak to a Payments Bureau that offers an emergency processing service. Expert Payments Bureaus are able to react quickly and offer an immediate emergency service.
Knowing that they can contact a Payment Bureau for immediate emergency processing, gives staff the reassurance that they have a system to follow should any issues arise. Experts are then available to take over and process payments while the business focuses on repairing any damage caused by the disaster – or tracks down lost smartcards or information from staff who are off sick or on holiday.
Having this system in place means organisations can be safe in the knowledge that their essential payment services are in safe and experienced hands, allowing them to concentrate on restoring the damage.
Another way to be prepared for unforeseen eventualities is to use a cloud-based payment solution, particularly for payments processing. This means that if damage is sustained to local software, systems can be accessed remotely, allowing key staff to continue to operate vital services from any location even if damage occurs. This ensures payments aren’t missed, salaries and wages are paid on time and cash keeps flowing.
The key thing, whatever the disaster, is to put a realistic plan in place for what vital services the business cannot live without, and how these can be run when entire offices or technology are inaccessible. This means should the worse happen (and I hope it never does), staff can follow a simple procedure to make sure important services remain operational, leaving them to focus on getting everything else back up and running as quickly as possible.
Most importantly, this minimises disruption for other parties.
Jo Gibson is operations director at Payment Bureau First Capital Cashflow.