Nowadays all most all companies use bacs payments to send sums of money from one bank account to another – whether it’s for their suppliers, clients or other parties. Bacs software can be integrated with your accounting software, meaning that accounting data doesn’t have to be entered several times. This cuts down on lost time and resources, thereby saving you money. Bacs itself is still in use but, in practice, almost all so-called ‘bacs’ payments today are actually FPS, or the ‘faster payments system’. Whereas bacs usually takes three working days, FPS is practically instant. The money usually appears in the receiver’s account within minutes, if that.
There are numerous benefits to using bacs instead of the older alternatives. Although some transactions inevitably have to be completed in cash (although there are technological advances that are making a cashless system a closer reality) you will usually want to cut down on the amount of cash you have on the premises. This presents a risk and has an additional cost in terms of your insurance policy. Cheques are still in use, but these are slow to process – both for you in writing them and in the bank in clearing them. Additionally, you have no idea when they will be cashed. Sometimes people will leave cheques for weeks or more before they can get to a bank. This means that money leaves your account at unexpected times, which is not good for your cash flow.
Larger firms use bacs software routinely because it is so convenient, speedy and safe – there are numerous levels of security built in, and losing money through fraud is almost unheard of. (In the event that something does go awry, you will almost always be refunded.) It’s the smaller companies that resist making bacs payments for longest. Partly this is because there is a small cost of moving across your systems. However, it’s more likely a less measurable cause: ‘We’ve always done things this way.’ As more and more companies use bacs, though, the ones that remain with the less effective and secure systems will be left behind. It is now an inconvenience to be paid by cash or cheque in many cases. A business that is slow to update will be at a disadvantage, since the competition could well be making electronic payments – saving time and money in the process.
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