Since bacs came onto the scene in the late 1960s, it has grown in popularity until now, some 44 years later, when it is utilised by the majority of organisations in the UK. Bankers automated clearing services allows financial transactions to be processed electronically, meaning that cash and cheques are no longer necessary for the vast number of big payments – anything from wage packages to bills. Bacs software allows businesses, charities and other organisations to enjoy the benefits of this, which are numerous. Consequently, those groups which do not make bacs payments are becoming fewer and fewer in number. One of the biggest benefits of bacs is security. Transferring funds electronically means that money does not have to be handed over in person, and cheques do not have to be filled out or cashed. The potential vulnerabilities of online processing notwithstanding, this makes for safer payments. This is of particular use to employers with large numbers of staff; pay day would require keeping significant quantities of cash on the premises, or else writing large numbers of cheques.
Speed is another benefit. Bacs clears within a maximum of three working days, but in reality it is usually much faster. FPS (faster payments service) is practically instant, meaning that money appears in the recipient’s account almost immediately after it has been sent.
But one of the most significant benefits to businesses and other organisations is the automation of accounting processes that bacs allows. Bacs software can be integrated with accounting software. This results in a proportionally higher degree of predictability for finances and a better oversight of cashflow. Payments can be scheduled for a given point in the month – pay day being the perfect example – and so surprises due to unpredictable payments are less likely to occur. This means that overdrafts and interest charges are less likely to be used and had.
All in all, there are many reasons why organisations have used bacs payments and are continuing to do so. The chief benefit of bacs comes down to convenience – and the peace of mind that results from that. Bacs software allows payments to be automated, as well as being done safely and swiftly. Speed is still occasionally an issue, but FPS has avoided this in the vast majority of cases (some 95 percent). In any case, CHAPS and SWIFT processing are available for an additional fee, and these have a guaranteed (same day) time frame.
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