What bacs is and what it achieves
Bacs is the generic name for electronic cash payments – that is, payments made directly from one bank account to another, without an intermediary such as cash or a cheque. Bacs payments should happen within three working days at the most: this is always the standard time stated. However, although this was the approximate time frame in the early days, nowadays you can expect payments to go through much faster: when the sender and recipient use the same bank, transfer is almost immediate. In other cases you will have to wait up to three days, though same-day transfers are normal. Bacs software therefore has at least one major advantage over older systems: it is fast. For large sums of money, it is a safe and speedy way to transfer cash between accounts, making it ideal for paying employees and suppliers.
Almost all businesses use bacs nowadays. It is far safer than using cash or cheques, which used to be the standard way of paying people. There are several strands of protection built in, so bacs transfers are extremely secure – certainly more so than writing lots of cheques or holding large amounts of money on the premises. It is also more convenient: you know when the money is going to leave your account, so your cash flow is predictable. It’s faster, too – not just in terms of the money arriving in the recipients’ accounts, but in actually making the transfer. These can be automated or completed with a few key-strokes, so counting money and signing cheques is a thing of the past.
The other advantage is that bacs software can be integrated with your book-keeping package, so you don’t have two related systems operating in parallel. This reduces the workload for your accounts team, as well as decreasing the problems caused by errors and lost material. Bacs payments can be made at a pre-decided time each month (useful for wages, for example) as well as one-off amounts. This gives you better oversight of your spending and increases accuracy, as well as making the system more efficient. Overall, bacs should make your life easier and give you more control over your accounts, allowing you more time to spend on business that is core to your organisation. It will also mean you spend less time addressing calls from staff and suppliers wondering when they will get paid or complaining about mistakes.
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