How does BACs work?

Overview

BACS (Bankers' Automated Clearing System) is a payment system that enables the electronic processing of financial transactions. It's commonly used for payroll, supplier payments, and direct debits.

BACS Payment Cycle

BACS payments operate on a standard 3 working-day cycle:

Day 1: BACS Input Day

• This is when the payment file must be submitted to the BACS network
• Deadline for guaranteed processing is 16:00
• Files can be submitted up to 30 days in advance of the intended payment date
• Late submissions (after 16:00) may be processed on a best endeavors basis but risk being delayed

Day 2: BACS Processing Day

• This is the working day before the pay date
• Files are delivered to recipient banks
• Banks begin processing each payment instruction

Day 3: BACS Entry Day

• This is the actual payment date
• Funds are debited from the payor's account
• Funds are credited to recipients' accounts simultaneously

Important Notes

• All three days must be working/banking days (not weekends or bank holidays)
• The three working days need not be consecutive (e.g., Friday, Monday, Tuesday)
• BACS cannot process payments in less than 3 working days
• If you need faster payments (next-day or same-day), you must use the Faster Payments Service (FPS)
• BACS payment limits are agreed between the client and their bank, but typically support higher payment amounts than Faster Payments

Using BACS Through Intelligent Payroll

• Intelligent Payroll partners with a BACS Approved Bureau (CreDec) regulated by the Financial Conduct Authority
• Clients do not need direct access to the BACS system as Intelligent Payroll manages this on their behalf
• We run payroll as normal, create the BACS output report, and handle the submission process
• The system completes the process in accordance with the BACS cycle