Not so many years ago, it was common practice for employees to be paid weekly, and many would get an envelope every Friday containing their payslip for the week and their earnings in cash. The security aspect of this was obviously an issue for many businesses and organisations and most then moved on to paying their employees by cheque. Cheques were more secure and less liable to be stolen, but had the disadvantage that the employee had to go to the bank to pay the cheque in, and then wait until it cleared. In recent years most companies have moved to the Bacs system to pay their employees and now 90% of the UK workforce receives their money in this way.
Bacs derives from the title Bankers Automated Clearing Services and is the name given to the method of transferring money between bank accounts electronically. It is by far the most efficient method of paying staff, and means that staff have instant access to cleared funds in their account on the day when they are paid.
There are many advantages to choosing a payroll company who uses Bacs as opposed to one who uses cheques. Firstly, there is far less administration required in terms of matching cheques to payslips, putting them into envelopes and making sure that each envelope gets to the right employee. If the company has a few hundred employees this can be a very time consuming task. With Bacs the wages company puts all the information into the computer, it is checked and then at a touch of a button the money is transferred into all of the employee bank accounts simultaneously.
A second advantage of using Bacs is cash flow and predictability for the company paying wages. When employees are paid by cheque a business can never be exactly sure about when the money will be taken from their bank account as it takes time for the employee to pay the cheque into their bank account and then for it to clear through the banking system. With Bacs there is no uncertainty and the money leaves the company's bank account on the same day or time every month. From the employee point of view, there is no risk that their wages cheque will be lost in the post or be delayed, and they won't have to make the effort to go to the bank and pay it in, which is often inconvenient when working full time. Bacs payments cannot be stolen and if the employee gives the correct bank details they cannot be sent to the wrong person.
Using Bacs via a payroll company will also cut down on accounting and reconciliation time. Rather than there being one withdrawal per employee shown through the company's bank account when a cheque is cashed, the Bacs payment will be shown as one withdrawal for the whole workforce. This obviously cuts down dramatically on the amount of time spent reconciling the bank account and tying up payments and debits.
Bacs derives from the title Bankers Automated Clearing Services and is the name given to the method of transferring money between bank accounts electronically. It is by far the most efficient method of paying staff, and means that staff have instant access to cleared funds in their account on the day when they are paid.
There are many advantages to choosing a payroll company who uses Bacs as opposed to one who uses cheques. Firstly, there is far less administration required in terms of matching cheques to payslips, putting them into envelopes and making sure that each envelope gets to the right employee. If the company has a few hundred employees this can be a very time consuming task. With Bacs the wages company puts all the information into the computer, it is checked and then at a touch of a button the money is transferred into all of the employee bank accounts simultaneously.
A second advantage of using Bacs is cash flow and predictability for the company paying wages. When employees are paid by cheque a business can never be exactly sure about when the money will be taken from their bank account as it takes time for the employee to pay the cheque into their bank account and then for it to clear through the banking system. With Bacs there is no uncertainty and the money leaves the company's bank account on the same day or time every month. From the employee point of view, there is no risk that their wages cheque will be lost in the post or be delayed, and they won't have to make the effort to go to the bank and pay it in, which is often inconvenient when working full time. Bacs payments cannot be stolen and if the employee gives the correct bank details they cannot be sent to the wrong person.
Using Bacs via a payroll company will also cut down on accounting and reconciliation time. Rather than there being one withdrawal per employee shown through the company's bank account when a cheque is cashed, the Bacs payment will be shown as one withdrawal for the whole workforce. This obviously cuts down dramatically on the amount of time spent reconciling the bank account and tying up payments and debits.
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