Business leaders need to urgently address the move to Bacs' new internet-based payments service, to avoid putting their companies at risk, according to utility firm Northumbrian Water.

The company's financial systems programme manager Richard Moss warns that while migration costs are relatively small, there are significant implications for a company's cash flow if anything goes wrong.

'This is something that could stop a business in its tracks,' said Moss.

Bacs has issued a December 2005 deadline for all firms using its service to switch to Bacstel-IP, while companies using its X400 messaging service have to make a switch by next March.

Failure to comply with the new standard could result in firms being unable to pay staff or collect direct debit payments from customers.

Moss urges senior managers to get involved with the migration process, rather than passing it on to someone else in the IT department to take care of.

'I think a major worry about this is the extent to which this has been delegated to junior staff. This is something that needs to have senior people involved,' Moss said.

About 100,000 UK companies will be affected by the switch.

Northumbrian Water is entering the final stages of its migration to Bacstel-IP and plans to be finished by August.

The project is scheduled to take about ten months, but Moss concedes that it could have probably be done faster.

'You could probably do this in six months, but it's hard to do an effective procurement process in a very short time. If you did it quicker, it'd probably have a bigger business impact.'

The firm is using software from Eiger Systems that manages the process of creating, authorising, submitting and verifying of its Bacstel-IP payments.

But as an X400 messaging service, the company has to ensure that it will be fully up to speed before the March 2005 cut-off.

'As a utility, we have a major job to get ready for issuing bills in the first quarter of next year, so as an X400 user, we've needed to get this project going even faster,' said Moss.

The scale of the firm's operation highlights the importance of the project: it employs about 2,500 staff, deals with up to 5,000 suppliers and provides services for about 2 million customers.