Last year the Central Bank of Nigeria (CBN) introduced a policy on cash based transactions aimed at reducing the country’s dependence on a cash economy and reducing the inherent costs of moving cash that banks and other financial institutions incur as a result.

The policy already known as the ‘cash policy’ of the CBN stipulates a cash withdrawal limit of N150,000 for individuals and N1,000,000 for corporate organisations. Extra cash withdrawals above the stated limit attracts 10% fine of the excess amount for individuals and 20% for corporate bodies.

According to the CBN the cashless policy was introduced to modernise and develop Nigeria’s payment system in line with th vision 2020 goal, reduce cost of banking services which also involved moving around a lot of cash and improve the effectiveness of the monetary policy.

While the CBN monetary policy does involve other rules such as allowing only licensed cash in transit (CIT) companies to provide cash pickup services we are concerned in this article with the cash withdrawal aspects and check issuing rules in the policy as it will affect your business.

As the policy is set to take off in Lagos by 30th March 2012 you should already be prepared to turn your business or company into a cashless or near cashless one and save costs in the process. Here’s how you can key into the Central Bank’s cashless policy and save money for your business.

1. Embrace Internet Banking: Chances are that you may still be going to the bank for every banking need of your business. Registering your business account for internet banking services will not only save you the costs of having to go the banks for every little transaction you will also save yourself the stress and time loss standing in queues at the bank to pay in money to your suppliers.

With internet banking you can simply log into your bank account dashboard and transfer the needed sum to your suppliers and creditors without leaving your office. With internet banking you cannot run the risk of issuing a third party check above N150,000 which according to the CBN cashless policy cannot be cleared over the counter.

2. Start a Salary Payment Schedule: Do you have several staff and still withdraw money to pay them salaries at the end of the month? this is the time to change that. If your salary payments at the month end is substantial enough you should meet your bank and work out a salary schedule that will ensure that at each month end once you issue the directives to your bank your staff’s salaries are paid directly to the accounts of each staff. That way you reduce the risk associated with moving cash and you avoid paying penalties for overwithdrawing.

3. Convert Your Foreign Currency Income Directly Without Withdrawing: If you run a business that brings in substantial foreign currency there is a smart way not to lose part of your money to fines. Instead of withdrawing the currency have it converted to local currency and through online banking disburse the money for whatever purposes you want to use it for.

4. Try Mobile Money: Recently the CBN introduced licensed mobile money operators into the Nigerian financial space. This means that you can take advantage of mobile money platforms to do any of the following;

- receive payments from clients more quickly.
- pay people faster
- pay for supplies/ services purchased straight from your phone.
- send, withdraw and save money all from your mobile phone.

While it is still a new wave in Nigeria’s banking and money industry you should explore and study the various mobile money services available and choose the one you are most comfortable with.

Paul Eze is the Managing Director of Pejas Solutions Ltd, an ICT services company. He also edits NairaBrains.

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