Bacs Payments: The Complete Guide for UK Businesses

Bacs, short for Bankers' Automated Clearing System, sits at the heart of the day-to-day payments that keep many UK businesses moving.

From payroll and supplier runs to expenses, pensions and refunds, Bacs helps organisations make and collect regular payments through the UK banking system. But how does a Bacs payment work, how long does it take and when should you use it instead of Faster Payments or CHAPS?

This guide explains Bacs payments in simple terms, including Direct Debit, Direct Credit, access routes, payment details, processing times, costs and the checks businesses should make before submitting a payment file.

Receive international payments 🌍

Note: Wise Business offers a free Essential plan for basic spending and transferring. If you need to receive money, set up direct debits, or generate invoices, you'll pay a one-time £50 setup fee to unlock the Advanced features.

Bacs payments at a glance

What is a Bacs payment?

According to Bacs Payment System, Bacs is a UK electronic transfer service used to make payments between accounts. Bacs payments usually fall into two categories: Direct Debit and Direct Credit.²

The system supports payments between UK bank accounts through banks, building societies and payment service providers that connect to Bacs directly or indirectly.²

Bacs Direct Debit

With Direct Debit, a customer gives an organisation permission to collect agreed payments from their bank account. The organisation can then collect payments according to the instruction and agreed schedule.

Direct Debit is commonly associated with recurring household bills, subscriptions, insurance, utilities and other regular collections.³

Bacs Direct Credit

With Direct Credit, an organisation sends money into another person's or organisation's UK bank account. Bacs Direct Credit payments require payment data such as the payee's sort code, account number, amount and payment date, according to the Bacs Direct Credit information page.¹

Businesses commonly use Direct Credit for:³

• Wages and salaries
• Supplier payments
• Employee expenses
• Pensions
• Dividends
• Insurance settlements
• Refunds

What are Bacs payments used for?

Bacs is useful when a payment is predictable, scheduled or part of a larger payment run. Payroll is a familiar example: the business knows who needs to be paid, how much is due and the date the payment should reach each employee.

The same structure can work for supplier payments, expenses, pensions, dividends and refunds. A business can prepare approved payment data, submit it through its chosen access route and reconcile the result after the processing cycle.^1,3

The Bacs Direct Credit information page explains that businesses can submit payment instructions up to 30 days in advance of the payment date. This can help payroll and finance teams plan around approval cut-offs, weekends and bank holidays.¹

How does a Bacs payment work?

The exact process depends on the bank, payroll provider, payment service provider or bureau you use. A typical Direct Credit workflow looks like this:

1. Confirm that your bank, payroll provider, payment service provider or bureau gives you access to Bacs
2. Collect the payee's account name, sort code and account number
3. Check the details before adding the payee to your payment data
4. Enter the amount, payment date and reference
5. Match the payment to an approved payroll entry, invoice, expense claim or other source record
6. Apply your internal approval or dual-authorisation process
7. Submit the payment data through your direct-access route or bureau
8. Save the submission or processing report
9. Reconcile the debit from your account with the payment data
10. Review and resolve rejected or returned payments

The source data matters as much as the submission. Supplier and employee bank-detail changes should be independently verified, especially where the request arrives by email. Keep evidence of the check and use a second approver for higher-risk or higher-value payment runs.

What details do you need to make a Bacs payment?

For a standard Bacs Direct Credit, the core payment data includes:

• Payee name
• Six-digit sort code
• Eight-digit account number
• Payment amount
• Payment date
• Payment reference

The Bacs Direct Credit information page explains that the payment is processed using the payee's sort code and account number, so those details need to be checked carefully before submission. The payment reference should give the recipient enough information to identify the payment and connect it to the right invoice, customer or account.¹

Your business may also require an internal approval reference, payroll identifier, purchase-order number or invoice number. These controls support reconciliation even though they aren't part of the core bank-routing data.

How long does a Bacs payment take?

A standard Bacs payment takes three working days to complete. The processing cycle is:

The Bacs Direct Credit information page explains that payment files can be submitted between 07:00 and 22:30 during the input day, and the complete process takes less than three days from start to finish when the relevant cycle is followed.¹

Build your payment calendar around the agreed payment date, processing cut-offs, weekends and bank holidays. If the payment needs to arrive immediately or near real time, consider whether Faster Payments is more suitable.

Bacs vs Faster Payments vs CHAPS

These payment systems serve different business needs:

For a monthly payroll run, the three-day Bacs cycle may fit the business's approval process. For a one-off payment that needs to arrive quickly, Faster Payments may be easier. CHAPS may be relevant where value or timing justifies a same-day sterling payment and the provider offers it.

How do businesses access Bacs?

Businesses can access Bacs directly or indirectly. The Bacs Direct Credit information page explains that direct access may suit organisations processing a high volume of payments, while indirect access through a payment service provider or bureau may suit smaller organisations or those with fewer payments.¹

Direct access

With direct access, the business or its payment software submits payment data to Bacs through the relevant technical and operational arrangement. This route may suit an organisation with enough payment volume and internal capability to justify the setup and ongoing controls.

Indirect access through a PSP or bureau

With indirect access, a payment service provider or Bacs-approved bureau submits the payment data on the organisation's behalf. According to Bacs Approved Bureau Scheme, Pay.UK maintains an approved-bureau scheme and directory for organisations that provide this type of service.⁶

Compare the practical workflow before choosing a route. Consider file creation, approval controls, payroll or accounting integration, processing reports, rejected-payment handling, support and total cost.

How much does a Bacs payment cost?

There isn't one universal Bacs price for every UK business. The cost depends on how you access the system and the commercial terms set by your bank, payment service provider, payroll platform or bureau.

The Bacs Direct Credit information page explains that direct access may be faster and cheaper than using a bureau where payment volume is high, while indirect access may be more suitable for smaller organisations. The right comparison should include the full operating cost, including:

• Bank, PSP or bureau charges
• Software or payroll-platform fees
• Payment-file preparation and approval time
• Rejected or returned-payment handling
• Reconciliation and reporting work
• Controls for new or changed payee details¹

Ask the provider for a worked example based on your number of payees, payment runs and payment files. A low per-payment charge may still be poor value if the workflow creates significant manual work.

When should you use Bacs?

Bacs may be a good fit when your business needs:

• Scheduled payments on known dates
• Regular payroll or supplier payment runs
• Payments to many UK recipients
• A repeatable approval and reconciliation process
• Payment instructions that can be prepared in advance

Faster Payments may be a better fit when the payment is urgent, one-off or needs to arrive quickly. CHAPS may suit a high-value, time-sensitive sterling payment. For an international payment to an overseas recipient, check the destination, currency and available payment route instead of assuming that a UK Bacs payment will work.

Bacs payment checklist

Before submitting a Bacs payment or payment file, check:

• Bacs is the right payment method for the destination and timing
• The payee's name, sort code and account number are correct
• Any new or changed bank details have been verified through a trusted route
• The amount and payment date match the approved source record
• The payment reference is useful for the recipient and your reconciliation process
• The payment file has been reviewed and approved by the right person
• Cut-off times, weekends and bank holidays have been considered
• You know how rejected and returned payments will be handled
• You have a process for reconciling the payment file against your ledger

Common Bacs payment mistakes

Avoid these problems:

• Using Bacs for a payment that needs to arrive immediately
• Submitting a payment file without checking the payment date
• Changing supplier or employee bank details based only on an email
• Letting one person create and approve a high-value payment file
• Omitting a useful payment reference
• Failing to save the submission report
• Treating the payment run as complete before rejected items and ledger entries have been reviewed

Discover Wise Business

Wise Business offers a free Essential plan for basic spending and transferring. If you need to receive money, set up direct debits, or generate invoices, you'll pay a one-time £50 setup fee to unlock the Advanced features.

With Wise Business, you can:

• 🌍 Send money to 70+ countries and pay overseas invoices at the mid-market exchange rate with low, transparent fees and no hidden exchange rate markups (product availability varies by region)
• 📥 Receive payments in 24 currencies and counting
• 💵 Get local account details for 8+ currencies, including USD and EUR, to let your customers pay in a currency they know and trust - convenience for them and peace of mind for you
• 💰 Hold money in 40+ currencies
• 🔁 Convert currencies anytime at the mid-market exchange rate with low, transparent fees
• ⚡ Use the batch payments tool to create and send up to 1,000 payments in a single transfer
• 👥 Run payroll and make international payments for up to 1,000 employees all over the world - including paying suppliers using local payment methods like ACH, SEPA, and Faster Payments
• 💳 Get business debit cards with 0.5% cashback for you and your team to keep track of team expenses and spend all over the world, with real-time visibility and categorisation. See full cashback terms and conditions
• 🏢 Manage cash in 55+ currencies across international offices from a single business account and move money between business accounts in seconds (exact speeds can vary depending on individual circumstances and may not be the same for all transactions)
• 🧾 Connect and sync every business transaction to your favourite accounting software, including Xero, Quickbooks, and more
• 🔐 Create your own payment approvals process to manage your team better with customised access for different team members, roles and permissions
• 📑 Create custom professional invoices and schedule invoice payments for future dates
• 📈 Earn variable returns on GBP, USD and EUR with Wise Interest (Capital at risk, growth not guaranteed. Your money is at risk if governments default or interest rates go negative. Rates vary by country and currency. Rates are variable. Visit Wise Interest to find out more)
• 🔗 Create payment links and QR codes to get paid easily (Card payment acceptance for new Wise Business customers is currently unavailable. Payment methods subject to eligibility and availability.)
• ⚙️ Automate payouts with the Wise API (comes with 24/7 customer support, a sandbox account to test integrations, API tokens, and clear documents on how to implement and make the most of our API)

Make the wise choice when selecting a business account for your domestic and global needs.

Be Smart, Get Wise.

Register for Wise Business ✍️

**Investments are not guaranteed, and your capital is at risk.

Wise is an Electronic Money Institution (EMI), so features like Interest and Stocks may be covered by the Financial Services Compensation Scheme (FSCS). For standard cash balances, we safeguard your funds to meet regulatory obligations.

In the UK, Interest and Stocks are provided by Wise Assets, the trading name of Wise Assets UK Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA number 839689).

We do not provide investment advice, and taxes may apply. If unsure, seek qualified financial advice. Full fund information is available on our website.

FAQs

Can Bacs payments be made at weekends?

Bacs payment planning should account for working-day processing and bank holidays. If the payment date or processing cycle crosses a non-working day, check the cut-off and settlement date with your bank, PSP or bureau before submitting the file.

Can a small business access Bacs directly?

It can depend on the business's payment volume, systems and provider. Direct access may suit a higher-volume organisation, while indirect access through a PSP or approved bureau may be more practical for a smaller payment operation.^1,6

Can Bacs be used to pay an overseas recipient?

Bacs is a UK payment system for payments into UK bank accounts. An overseas payment generally needs a route that supports the destination country and currency. Check the recipient's payment details and the provider's available route before sending.

What should a business do if a Bacs payment is rejected?

Check the rejection reason, confirm the payee's details, correct the source record if needed and contact the bank, PSP or bureau if the reason is unclear. Record the correction and resubmission, then reconcile the final payment against the original ledger entry.

Sources:

1. Bacs Direct Credit
2. Bacs Payment System
3. Types of transactions made on the Bacs Payment System
4. Faster Payment System
5. CHAPS
6. Bacs Approved Bureau Scheme

Sources last checked on 5th August 2026