Bacs, or Bankers Automated Clearing Software, has been in use a long time. Essentially, though, bacs payments merely entail transferring money directly from one bank account into another. FPS or Faster Payments Service is exactly the same, but it generally occurs almost immediately, whereas Bacs takes up to three working days. Bacs software is therefore different to credit or debit card transactions, and has advantages and disadvantages in comparison.
Since bacs payments are made right from one bank account into another, they are effectively irreversible. With credit cards, the transaction can be cancelled and the cash returned to you if there is good reason (such as fraud, or the item you ordered turned out not to be as advertised, or never dispatched at all). With bacs, this is far harder. That is a good thing for stores, since you wonât have to worry about customers making uncalled for chargebacks if they change their minds. For buyers, though, it means transfers cannot be undone. In most cases, this will not be a problem because bacs tends to be used for paying suppliers and for your peopleâs wages, and so on. These are mostly predictable and are paid in arrears. However, if a mistake (such as a typo) is made, it is not a simple matter to get back the money. Without the goodwill of the recipient, it can be extremely time-consuming. If you are making monthly payments, it might simply be easier to change the next one rather than ask for the last one.
Bacs software can be connected into your accounting application to ensure that mistakes donât routinely happen due to human error, but itâs impossible to eliminate them altogether. That bacs payments are made in their millions every day demonstrates that this need not be a major flaw for bacs, and that thereâs no reason your organisation should not use it too. Indeed, the advantages far outweigh any minor problems that might arise from its use. Bacs is more secure, faster and easier than paying by cash or cheque. Itâs also the standard, now â or, at least, FPS is â which means that if youâre still paying by more traditional methods then you will naturally find yourself at a competitive disadvantage. There is really no good reason to hold large amounts of cash on the premises or to use time-consuming and inefficient cheques when immediate and straightforward transfers are possible at minimal cost.
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