Bacs payments and its practical application particularly the role of a Bacs bureau can be confusing at times. There is plenty options to choose from when it comes to paying wages and suppliers. This guide will hopefully help small businesses owners to make the right choice whether a Bacs approved bureau provides the expected benefits vs alternatives.
When paying employees Bacs is by far the most widely adopted payment type utilised by employers in this country. A bacs approved bureau allows businesses to directly submit payment files to third party software providers (list here) who then execute payments on behalf of your business. Sound good? Let's delve into the potential benefits and drawbacks.
A Bacs approved bureau enables a business with bank approval to send payments through a Bacs software: You import a payment file to Bacs bureau who then submits payment instruction on behalf of you. This debits a lump sum out of your business bank account without any direct interaction needed with bank.
The bank approval is a one-off permission by issuing a Bacs Service User Number (SUN) which is your company's identifier in the Bacs system.
Obtaining a SUN takes is normally takes around 1-3 months requiring the bank to perform due diligence on your business, some banks may have revenue thresholds you need to hit in order to qualify - typically around 2 million yearly turnover.
By using a Bacs approved bureau your minimum contract terms seem to be 1-3 years depending on the provider, and normally require a setup fee of 500-1,000 pounds, along with a yearly fee per company of around 150-250 pounds.
A Bacs approved bureau isn’t charging for the actual bank transfer, this is charged by your bank directly even though they aren’t involved in the payment submission (expect something between 8p to 25p per line + file charge).
Given you can stomach 3 day clearing cycles with any Bacs direct credit payment it comes down to a few things:
Running your payroll payments through a Bacs bureau might be the perfect option if you have a stable amount of employees.However, the system is decades old and there may be better alternatives out there for you: