You would have heard the word BACS mentioned over time and you have probably wonder what BACS means and why I am paid using BACS?
What is a BACS payment?
A BACS payment is a bank transfer from one account to another, this takes 3 business days to arrive. However, BACS payment can also be a direct debit, which is the opposite of a bank transfer. This is where a company like Simply COLLECT that deals with your payment collections pulls the money from another customers account.
BACS payments are often used to pay people’s wages, salaries and benefits. They are also the preferred payment to pay pensions, employee expense and many other payments/invoices. BACS payments will allow you to make regular payments, it will make it both flexible and cost-effective.
BACS payments are the most common way to do a bank-to-bank transfer in the UK hence why most employers use them as a method of paying salary. There are two main types of BACS payment, Direct Debit and Direct Credit; this will be where one deposits the money into another account.
Direct Debit and Direct Credit both require you to know information about the other account details to complete the payment. To pay by BACS this is what is required
- The name of their bank
- The account number
- The sort code
But are BACS the same as a bank transfer? Yes, BACS is a type of bank transfer. There are 3 types of bank transfers within the UK.
- BACS – Banker Automated Clearing System
- CHAPS – Clearing House Automated Payment System
- FASTER PAYMENT
However, BACS is the only payment that can be used for a Direct Debit which is why it has become the UK’s most popular type of payment.
Can you make BACS payments online?
You can make BACS payments online however you will need to be BACS Sponsored and have a registered BACS Service User Number (SUN). Simply COLLECT is only one of a handful of approved companies within the UK that are authorised to provide these collection services.
Are BACS transfer safe for my business and my customers?
A BACS payment is an incredibly safe way to collect and make payments. BACS is used all around the UK for the secure delivery of electronic payments. BACS has been used for clearing and settlement of automated payments in the UK since 1968. BACS payments have been used to make more than 130 billion transactions which have never been lost, that’s a massively impressive number. To be able to provide the service to collect the payments someone like SimplyCOLLECT has to go through yearly inspections to ensure they are on top of your data security and the entry customer.
The BACS system is secured using protected and encrypted passwords. The system is always managed to validate data and use authentication for anyone to access it.
The Direct Debit Guarantee will protect all customers against any payment that has been made fraudulently.
Do banks charge for BACS payments?
There is a charge for BACS payments however they are the cheapest way to make a bank payment. It only costs a few pennies and depends on your bank as to how they charge you. Your payment processer for Direct Debit will also have costs so be sure to factor this in.
Can a BACS payment be recalled or stopped?
All BACS and faster payment credits are cleared funds on the day they get credited, they can be used as soon as they are in the account and cannot be recalled. The only exception to this is when a post-dated Direct Debit is used for a future date however the time frame is small.
Can BACS payments arrive on a weekend or bank holiday?
BACS payments are only credited to accounts Monday to Friday and will only come once a day, this is normally early in the morning. BACS payments will not come on a bank holiday, however.
What is the 3 day BACS cycle?
BACS Direct Credit and Direct Debit payments take up to three working days to clear.
- Payments are submitted to BACS on day 1
- Payments are processed by the bank on day 2
- By day 3 the money is taken from one account to the other
What is Direct Debit used for?
Direct Debit is mostly used to collect regular or recurring payments. This could be for things such as
- Subscriptions
- Memberships
- Bills
- Invoices
The advantages of using direct debits are;
- They carry lower costs than credit or debit cards
- Great for recurring payments, once the direct debit is in place you do not need to worry about it again
- Credit and debit cards can be stolen, there easy to lose or typically after 2/3 years they will expire, however using direct debit is reliable, failed payments are minimised. The successful payment rate with using SimplyCOLLECT is between 95%/98percent meaning it is unlikely for payments to bounce back as unsuccessful.
Simply COLLECT are BACS Authorised can they help my business?
Here at Simply COLLECT we like to take the pressure from collecting payments and chasing missed ones away from you. We look like the bad guys so you don’t have to. With getting rid of trying to see who has paid, and on top of your cash flow and customers.
If you are looking to try out our services free of charge please contact us on 0330 223 3152 where our friendly staff will take a few details to make sure you get passed through to the correct team.
Alternatively, you could email us at enquiries@simplycollect.co.uk or go to our website and fill out our free trial form.