There are a lot of people who use the terminology wrongly and often say bacs when they dont actually mean bacs at all. or indeed are led into thinking the transfers they do from their private bank account are bacs payments when indeed they may just be just the (newer) type Faster Payments.
A short, quick breakdown.
Standing order - a customer sets up the payment instruction, fixed amount each month, week, quarter or per annum. Used to be pay on day 1, reaches destination on day 3, but if at the same Bank then the 3 day rule is now overriden by the same day payment process.
Direct debit - similar to the above, BUT, it is set up by the person being paid/due the money. Can be for variable amounts. Customers are covered by the debit debit indemnity which means if they dispute a payment then the Bank has to refund the customer (and then get the funds back from the person running the debit debit scheme). Strict rules govern this scheme.
Bacs - officially for BULK payments process, cost effective around the 200 volume mark. Used by say a firm doing a payment run for LOTS of suppliers and staff. They create the Bacs file on say a Wednesday and it gets put into the Banks processes on the Wednesday, however the payment from their Bank AND the payment to their suppliers doesnt happen until day three, ie the Friday. (so they often gain from 2 days extra help on cashflow).
HTH
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I think that you deserve a gold star for simplifying that so much Joanne... I know that you were gagging to talk about Clearing and how it really works. Go on, admit it. You deleted stuff before you posted didn't you. lol.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
"There are a lot of people who use the terminology wrongly and often say bacs when they dont actually mean bacs at all."
Quite.
I'm long past the point now where I've given up trying to correct them - though I avoid (ab)using the term myself when talking to those who make that mistake1.
But what really annoys me is when I get clients' invoices and see "paid by bac's" or similar written on them.
1. However, when setting up suppliers in the version of Sage I use, I do select "BACS" as the payment method for paying people by bank transfer - but that's because there are a limited number of options and that's the closest one to the one I really want. There are a number of 'User defined' ones, but I've never worked out where in the configuration they are defined...
...until now. I've just spotted it, and promptly facepalmed. FFS! That's a good example of the complete inconsistency that has pervaded Sage for approximately forever.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
I think that you deserve a gold star for simplifying that so much Joanne... I know that you were gagging to talk about Clearing and how it really works. Go on, admit it. You deleted stuff before you posted didn't you. lol.
Oh how right you are about me deleting a pile of stuff, you know me so well
It was as I was about to type 'AUDDiS' that I realised I was getting carried away.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
"There are a lot of people who use the terminology wrongly and often say bacs when they dont actually mean bacs at all."
Quite.
I'm long past the point now where I've given up trying to correct them - though I avoid (ab)using the term myself when talking to those who make that mistake1.
But what really annoys me is when I get clients' invoices and see "paid by bac's" or similar written on them.
1. However, when setting up suppliers in the version of Sage I use, I do select "BACS" as the payment method for paying people by bank transfer - but that's because there are a limited number of options and that's the closest one to the one I really want. There are a number of 'User defined' ones, but I've never worked out where in the configuration they are defined...
...until now. I've just spotted it, and promptly facepalmed. FFS! That's a good example of the complete inconsistency that has pervaded Sage for approximately forever.
Totally agree!!!
sage one, cloudy rubbish, has had yet another of its 'handy' ( yer right) updates so that when keying Bank payments you can choose between a few options, includes cheque, electronic, PayPal, debit/credit cards but not any of the others,not even the basic standing order/direct debit option. Waste of space.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
What did they call the system before faster payments? I've always known that to be BACS, even for a single transaction, when it would take 3 days to get to the recipient.
Going off on a slight tangent, I think the faster payments was a wonderful advancement.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
What did they call the system before faster payments? I've always known that to be BACS, even for a single transaction , when it would take 3 days to get to the recipient.
Going off on a slight tangent, I think the faster payments was a wonderful advancement. Unless someone puts the wrong number on the payment and then you cannot do a recall on it (which was the benefit of the previous 3 day payment thing!) Oh and yes Ive seen it happen LOADS of times, for some chunky amounts too, with people crying into their beer at having lost a pile of dosh!
With a lot of banks if you didnt use online banking, mostly you couldnt do one off payments unless you paid a fee and then that was for same day transfers, such as CHAPS payments. Online payments took three days, much like Bacs BUT the payment was debited day one and credited day three, unlike bacs which was day three for the debit/credit. Of course - behind the scenes I couldnt possibly say what was going on in terms on inter Bank settlements of such things
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
