Bacs stands for Bankers Automated Clearing System, a type of electronic payment system. The term is now used widely for any electronic transfer of money, although strictly speaking bacs payments are distinct from FPS (faster payment system). The former takes three working days, the latter is all but instant. You may also have heard of SWIFT, which is a guaranteed payments service (which comes with an extra charge), and BIC and IBAN, which are used for international transfers. To all intents and purposes, though, when people are talking about transferring funds automatically, they use the term bacs. This means has numerous advantages over and above traditional methods of payment such as cash and cheque. Bacs software can also be joined with your accounts systems to minimise double-entry (or worse) and reduce errors caused by multiple people using the same information in varying contexts.
One of the most oft-heared objections to bacs is security, but it is used extensively across the world and by organisations of all sizes and types. It is both faster and more reliable than paying wages and suppliers by cash or cheque, and comes with several kinds of protection so that – if the worst happens – you will almost certainly be refunded. If you are dealing with cash, you will need extra insurance. That represents money that you don’t have to waste.
One of the chief benefits of using bacs software is that payments can be automated. Many of your outgoings will happen at the same time – rent on your premises and wages being two of the most important. If you pay your staff by cheque, you have no control over when the cheques are cashed and consequently when the money leaves your account. That means you could potentially hit cash-flow problems. (Not only that, but busy workers will resent being paid this way, since they have to find the time to go to the bank.) Changing to bacs payments means that you will always know when these substantial outgoings are going to happen, and can budget accordingly. If you integrate the software with your accounts package, you can remove another step – and additional cost – along the way. As a result, making the transition to bacs will mean your company is leaner and more efficient – something you can’t take for granted in tough times.
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