A proposal from the ICAEW board to introduce changes to its regulations to allow payment of membership fees and subscriptions by instalments has been rejected by Council members at the latest ICAEW Council meeting, despite the institute’s arguments over the benefits to members of offering more payment choices
The plan was to offer members the option to pay in four instalments collected by direct debit from December to September, starting in 2015.
However, opposition from Council members centred around the fact that accountants would not need to pay by instalment.
ICAEW said the aim was to cut its processing costs and reduce the time spent chasing up current non-payers of the annual fees, while members would benefit from the ability to spread the costs of subscriptions, special interest group memberships and practicing certificates over the year.
However, the proposals were defeated when they were debated at last week’s Council meeting by 26 votes to 21, so payment by direct debit instalments will not now be introduced.
Information prepared ahead of the meeting said moving to instalments would change the ICAEW’s in-year cash profile between January and September, as currently over 80% of annual fees are paid by the end of January, but would not give a permanent cashflow reduction.
Instalments will change the in-year cash profile between January and September but will not give us a permanent cash flow reduction. At current interest rates the reduction in income is £13k and we retain average cash balances of £18m over the year, as well as long-term investments of £30m which are not affected.
ICAEW said it would operate the instalment scheme itself, as an earlier initiative operated by a third party, Premium Credit, had only attracted 100 subscribers because of the need to sign a credit agreement and pay a premium for the plan.
In the ICAEW's risk analysis of members moving to instalment payments, it estimated that if 50% signed up, its average £20.7m cash balance over the past year, but said the modest loss of investment income was worth it to provide a significant member benefit. The institute also said that switching to direct debit would help it reduce the bank charges it faces on credit card payments, which currently total more than £400,000 annually.
The ICAEW membership fee is rising to £340 for 2015, from £330, with renewal notices due to go out in November.
