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Billing BACS payments

The Bankers Automated Clearing Service (BACS) is a long standing system for sending money between UK bank accounts. It is widely used for paying suppliers and paying salaries. It has been in use for several decades and is very reliable. BACS is also used for Direct Debit, but what we are describing here is sending payments, also known as Direct Credit.

Timescales

A BACS payment takes 2 banking days to arrive, so if you send payment on Tuesday it will arrive Thursday. The system works in banking days, so the money will leave your account on the Tuesday, and be in our account at the start of day on the Thursday.

We pick up all BACS payments automatically at the end of the day (late at night) and record them on your statement with us as the day the payment arrived. If, in that example, you had an invoice due to be paid by any time on the Thursday, or any day later, then the BACS payment would be in time for that invoice. If the invoice had been due by 23:59:59 Wednesday, or before, and the BACS payment arrived Thursday then your payment would be late.

Remember, there are bank holidays. The BACS payment takes exactly two banking days, so always allow for weekends and English bank holidays.

Payment details

When making a payment you have to provide a number of details:-

  • Date
    The date you select when telling your bank to make a payment is normally the date the payment is sent, which is two banking days before it arrives with us. Always allow for bank holidays and weekends to avoid paying late.
  • Sort code
    This defines which bank and branch get the payment. This is 6 digits and usually show with hyphens, e.g. 20-16-99
  • Account number
    This tells the bank branch which of their accounts is to get the payment. This is normally 8 digits (though some banks have 6 or 7 digit accounts), and is shown just as digits, e.g. 30170666
  • Beneficiary reference
    This tells the beneficiary (the recipient of the payment) the details they know to identify the payer and what they are paying. In our case this is your account number with us, e.g. A1234A. See below for more details.
  • Amount
    The amount has to be specified, obviously. BACS does not have any limit on how much you send though your bank may have limits.

We include the payment details you must use when paying us on our invoices and statements.

Beneficiary reference

The beneficiary reference is just as important as the other details, and is there for the benefit of the person being paid. We tell you what reference to quote, and it is part of our terms that you quote it correctly.

Some people seem unable to quote the correct reference. If you do not quote the right reference and we can work out who you are (not always easy, we may have to wait for you to call with details), then we will allocate the payment and write to you explaining the mistake. If you persist in not quoting the reference we will charge an admin fee for the manual handling of the payment.

Expecting the correct reference to be quoted is not unusual. Indeed, BACS and the Payments council have provided a guide. It is why the reference field exists in BACS in the first place. You have to quote the right reference for any of the following being paid by BACS, so if you can find how you do that then you should be able to ensure you quote the right reference when paying us.

  • Value Added Tax
  • Corporation Tax
  • Business Rates
  • HMRC Tax and NI from PAYE
  • Gas
  • Electric
  • Water
  • Telephone
  • Personal tax
    HMRC saying you need to quote a reference

We do ask that you simply quote the reference we have requested, e.g. A1234A and nothing else. If you feel compelled to add something else always put on the end of what you are quoting and ensure you put a space between them, e.g. A1234A FRED BLOGGS. If you want to quote the invoice number you can, but what we want is the account number so quote the account number first, and a space. Also people often misquote invoice numbers with a 1 (number) not an I (letter) at the start. If you quote an invoice number we will still allocate the payment to the corresponding account in order and not to the specific invoice you quoted. Ideally, just quote the reference we have requested on its own with nothing else.

Remittance advice

You do not need to send remittance advices. If you are withholding payment for any invoice or part of any invoice you need to let us know. Payments arriving with the correct reference are simply applied to your account clearing the oldest due invoice. As long as all invoices are paid within terms then the allocation of specific payments to specific invoices is irrelevant. A remittance advice does not help in anyway and just wastes paper and/or time.

New fast payments

There is a new system now called fast payments which allows payments to go same day. The details you enter are the same, but the payment will often be sent using fast payments which typically arrive within minutes. If you use this method to pay us, we will take the bank statement date as the payment date. As most banks have a cut off of 6:30pm any payment after that time will be dated the next banking day. Bear this in mind if paying any invoices at the last moment, or if a non banking day is the due date, as the payment will be regarded as having arrived the next banking day which would be late.

CHAPS, etc

There are other ways to pay electronically such as CHAPS and international bank transfers. Often with these a longer reference is allowed, so please always ensure the reference is either only the account number with us, e.g. A1234A, or starts with that and a space. Some people will put their company name and then the payment reference, which is often truncated losing the reference.

Paying suppliers

Our preferred method of paying suppliers is BACS. Please ensure you advise us of the necessary details for payments including the reference you would like us to quote on all of the payments we make to you.

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