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How to Set Up BACS Payments for Your Business

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Last editedApr 20232 min read

If your business is primarily US-based, you most likely already use the ACH payment system to send and receive electronic payments. However, if you’re thinking about moving to the UK or deal with business contacts there, you’ll need to know how to set up Bacs payments instead. How do you make a Bacs transfer, and what does this mean? We’ll answer these questions and more below.

Bacs vs. ACH payments

The equivalent system to the UK’s Bacs is the Automated Clearing House, or ACH. This network only works within the United States, so you won’t be able to send payments to UK clients using ACH. It also only applies to banking rather than debit or credit card payments. Like Bacs, ACH enables two categories of payments, including Direct Deposits and Direct Payments.

  • Direct Deposits – These include payments from businesses or government organizations to consumers, such as payroll, tax credits, and interest payments.

  • Direct Payments – These include any bank-to-bank transfers, like the BACS direct credits. Direct Payments use funds to make payments either to other organizations or individuals.

How to set up Bacs for your business? 

To collect payments through Bacs, there are a couple of steps you need to undertake: 

  1. First, get a SUN number.

  2. Next, connect with a BACS bureau to assist with payment requests.

  3. Then, integrate the bureau with your internal business information system.

  4. Finally, set up monitoring/evaluation procedures for your BACS system to help you avoid errors.

How do you make a Bacs transfer?

While ACH covers payments within the US, you may need to learn how to set up Bacs transfers to deal with UK branches of the business. You’ll need some basic information to send Direct Credit payments through Bacs. The most vital details include:

  • Payment amount

  • Name of payee

  • Payee’s bank account number and sort code

  • Date of payment

It’s also important to include payment reference information so that your recipients can identify what the payments represent and who has issued them.

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Can you do a Bacs transfer online?

What about when you need to set up a Direct Debit to take payments from your UK customer’s bank account? Can you do a Bacs transfer online in this case? The answer is yes, provided you have a UK presence of your own for processing. As with Direct Credits, you’ll need basic information like the payee’s name, bank account number, and sort code.

BACS payments are transferred electronically through a variety of mediums. One option is to set up direct access using BACSTEL-IP software and a UK bank, or a Bacs-approved bureau. Another is to use a third-party provider like GoCardless.

Fees, terms, and conditions will vary depending on how you set up Bacs payments, so be sure to compare these carefully. This is particularly true if you’re arranging international payments or setting up a UK bank account for the first time.

If you’re wondering how to set up Bacs payments using a bank, you’ll need to keep in mind that this involves the highest fees. Not only do you need to purchase the approved software, but you’ll also pay the bank’s setup fees and transaction fees for every transfer.

How long do Bacs payments take?

No matter which transfer method you choose, the process takes three days.

  • Day 1: Payments are submitted to Bacs between 07:00 and 22:30. (Note that this is in the UK’s GMT time zone)

  • Day 2: The payment files are submitted to the recipient’s payment processing system and electronically sorted.

  • Day 3: Payments are credited to the payee’s account and debited from your account (or vice versa). Debits and credits occur simultaneously.

It’s worth figuring out how to make a Bacs payment when moving your business to the UK. Fortunately, the process is similar to the ACH payment system, so getting started is easy. 

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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