Recently, the Central Bank of Nigeria announced the implementation of its cashless policy in certain States of the nation. This was done as part of a multi stepped implementation programme geared at eventually installing a cashless economy within the whole states of the nation.
Part of the fallouts of this policy is that individuals can now only issue third party cheques cashable across the counter of not more than N150,000 (One Hundred and Fifty Thousand Naira Only) per day from their personal accounts. Individual account holders can only withdraw N500.000 (Five Hundred Thousand Naira Only) per day, irrespective of how much they have in that account. Corporate bodies can only issue third party cheques of not more than N3m (Three Million Naira Only). Anything above these in terms of withdrawals or payments attracts a charge on the account holder.
It was not until recently that the full implications of this policy came back to me. Firstly, we now understand that we have to visit the bank, I mean if you are in the middle of a production and you have to make a payment of an amount like say almost N400,000.00, you are left with the option of putting the production on hold to get to a bank and withdraw the said amount across the counter. The ideal thing in this situation would have been to get on your mobile device and effect a cash transfer from your account to your recipients account, however a lot of us are not yet that ‘tech’ inclined, moreover some of us still have this phobia of e-banking. Where you don’t have any of these issues plaguing you, there is the issue of service delivery by the various GSM networks in this country, God help you if your production is in one of those ….. areas, I guess you know what I mean. Another option would be through the use of the ATM cards. To achieve this, you either have to know how to do a cash transfer using an ATM machine, or you try to do a cash withdrawal from the machine itself. If your client possesses a POS, then you have a solution. To use a POS however means that your client will be logging around a POS system in order for anyone to effect a payment. There is another option of having more than one ATM card domiciled to different account numbers, this may work if you must do cash withdrawal and the required amount is not that high, however most banks have a limit to what you can draw from any particular account on a daily basis through an ATM machine.
Please note that in the words of Central Bank of Nigeria, the reason for the introduction of the cashless policy is to;
1. drive development and modernization of our payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020. An efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
2. reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.
3. improve the effectiveness of monetary policy in managing inflation and driving economic growth.
How does this affect a practitioner in the field? First and foremost, let me commend the initiative since it is laudable.
We have heard stories of where robbers have invaded hotels where practitioners lodged or other locations while on a production, and various sums of monies carted off. With the cashless policy in place, it then means that we should begin to hear less and less accounts of such occurrences. There have also been situations where practitioners have been short changed in their payments by agents of corporate organisations but it was later discovered that the individual effecting the payment did the short changing and not the organisation. This can only happen in cash based payment system.
A few days ago, a client wanted me to do a job for him and in today’s world you need to have a firm commitment from a client before delivering any service, so I asked for a commitment in terms of cash advance. He goes like ‘I cannot issue you a cheque for that amount, neither can I withdraw it courtesy of the cashless policy, so hold on while I transfer the said amount into your account’. So I waited for several days, hoping to get paid in time to organise my crew in time for the production. Finally I got the confirmation on the cash transfer alert by 6 p.m. on the eve of the production. Activities were expected to kick off by 8 a.m. the following day. It may look as if there was nothing wrong with this, however in a situation where one should organise his cast, crew together with the equipment (either owned and leased) on time for any production, you need to settle all payment issues in advance well ahead so that you can concentrate on the order of the day.
For us, it was a tough call but we made it anyway, but the issues that had me concerned was, what if I had decided to call off the production on the assumption that the payment was not coming or that the time was too short for me to effectively execute the project. The payment came in late so assuming I called off the project, my credibility and my organisations credibility comes into play. Why do I say so, we have had situations in the industry where people are paid to do a job and they don’t do it, so if you call off a project while your client has proof that payment was made, who will ask if the cancellation came in late? The burden of proof may lie with you, but who will ask, if you do not capture issues like this while negotiating the job, how do you explain your way out?
The other issue one should also consider is the issue of advance payment and outstanding balance where it applies. If people now have to do transfers into your account with or without you, how do you ensure that you get your monies especially from clients that are difficult to deal with? What guarantees do you have that your client will keep his word and pay what he is supposed to pay? These issues have always been here, but with the advent of the cashless policy, it becomes pertinent that we go further and explore all possibilities when it comes to doing business successfully.
All I am trying to say in this article is that with the cashless policy, we all need to revisit our approach to how we conduct our business, either whether we are paying for a service or we are being paid for a job. We need to firm up our contract terms, taking into consideration, all that could arise from such policies, and document effectively. We need to install processes that ensures that we are adequately protected from those who may want to take advantage of our ignorance. We also need to ensure that we communicate the changes in our workflow effectively and efficiently to our clients and business associates.
I am quite sure that there are so many other angles to this, especially where it concerns us in media and production. If you have had an experience, or if you think you have an idea that could help other practitioners in the industry, please feel free to comment the same on this article.