Recruitment agencies could face a payment crisis in January, warns electronic payments company BACS Payment Schemes.

With the old BACS system effectively ending at the New Year, agencies must migrate to the new system BACSTEL-IP, or find a payroll agency to handle the work for them. Otherwise they face having to pay employees by cash or cheque.

The cost of upgrading varies from £6,000 to £12,000 or more depending on the package and supplier.

As it stands, some 15,000 companies who currently submit payments directly to BACS have not migrated to the new system. Another 20,000 companies which submit payments via an agency have yet to complete the necessary paperwork for migration.

“There are only 35 suppliers for this, and installation can currently take around three months,” said BACSTEL-IP marketing manager, Mike Hutchinson. “Companies who have not migrated yet need to put their hands up and talk to a supplier now.”

The migration process involves the installation of new IT systems together with chip-and-pin cards for added security and requires internet access.