How Long do Bacs Payments Take? And Other Questions

6th November 2019

The term Bacs means Bank Account Clearing System.  Bacs payments are the most commonly used system for monetary transactions in the business world in the UK, and of course for payroll. They can be Direct Debits or Direct Credits, but in the case of the former, the requester must have permission to extract the funds first. In this blog we will answer the most frequently asked questions about this payment method, including how long the Bacs process takes.

Can anyone make a Bacs payment?

Yes, anyone can make a Bacs payment, as long as their bank offers this service. In many cases, businesses and accountants will use a Bacs bureau to carry out these payments; a service that we can offer here at FMP as part of your payroll service. The purpose of a bureau is to process the Bacs requests on your behalf, thereby removing the need for expensive, in-house software. The Bacs website offers this definition; “computer bureaux that submit transactions through the Bacs service on behalf of third party organisations.” BACS carry out Audits on third parties such as Bureaux, and following a successful audit will include the business details in the BACS Approved Bureau directory on their website.

Are Bacs payments the same as a bank transfer?

Yes, a Bacs payment is a type of bank transfer. In the UK, in addition to Bacs, CHAPS (Clearing House Automated Payment System) and Faster Payments are also types of bank transfers.

What information do you need to make a Bacs payment?

To send money via Bacs payment you will need the recipient’s bank account number and sort code, as well as the full name of the account holder. Whether you are using a Bureau or not you will also be required to obtain a Service User Number (SUN) from your Bank, Direct SUN if you are sending payments yourself, or Indirect SUN, if you are using a third party such as a bureau to make payments on your behalf.

How long do Bacs payments take to clear?

A Bacs payment will take three days to clear from beginning to end;

Day 1 – Bacs payment (or debit) is requested. This is done in the form of a file submission.

Day 2 – The recipient bank receives the file/request.

Day 3 – The transaction occurs.

The process only takes place on business days, meaning if a request was made on a Friday, the transaction would occur on the following Tuesday. Bacs transactions have been known to take up to 5 working days, but this is not the norm.

What time do Bacs payments arrive in the bank?

In general, a Bacs transaction will happen in the early hours of the morning. Payments should arrive in the relevant bank account by 7am. If an expected payment hasn’t hit by then, the likelihood is that it will take an additional day.

Can Bacs payments be reversed?

A full Bacs transaction can only be reversed on day 1, once the funds have cleared this cannot be undone. Individual Payments from within the file can be recalled, but this is actioned by your Bank and charges may apply.

Does it cost to use Bacs?

Yes, but Bacs is considered to be the least expensive bank transfer method. Each payment is just a few pennies; the exact amount will change depending on the number of transactions you are making. For example, a company using Bacs to pay around 1,000 staff will pay less than 10 pence per transaction.

As a Bacs approved payroll bureau, our experts here at FMP are familiar with all the ins and outs of this payment system, in addition to other aspects of payroll that a business-owner must be aware of. Get in touch today to get your payroll questions answered, or start your conversation about payroll software.