Government departments, local authorities and other State agencies will stop sending and receiving cheques from businesses from 19 September of this year.

The National Payments Plan, an initiative from the Central Bank, has named the initiative e-Day, which is part of a strategy to reduce costs and improve cash flow in the Irish economy.

e-Day was launched in September last year, to give businesses and public sector bodies 12 months to prepare for the smooth transition to electronic payments.

Cheque usage has halved in Ireland since 2005. However, Irish businesses still write 33 million cheques every year.

"Cheques are an expensive means of payment for businesses because of bank charges, stamp duty, postage, time spent making lodgements, unpaid cheques, and the ‘cheque is in the post’ culture of late payments," said Ronnie O'Toole, NPP Programme Manager.

Businesses in most other EU countries have stopped using cheques.

The NPP estimates that savings of up to €1 billion per year can be made if Ireland were to match best practice in Europe by migrating away from cheques and cash in favour of electronic payments.

Simon Bell, Commercial Manager, Sage Ireland said: “Recent research by Sage revealed that 70% of businesses have not heard of e-Day, despite the fact that 77% use cheques on at least a monthly basis. There are significant savings to be made for businesses - we estimate that sending and receiving just six cheques a week could save almost €5,000 per year by switching to ePayments.”

Businesses are advised to prepare for e-Day by discussing payment solutions with their contracting Government body and their banks.

e-Day will not affect consumer cheque usage, such as social welfare payments or pension payments.