Calculating a payment and actually getting the money into the recipient’s account are two separate jobs.
For payroll, you can calculate every salary correctly, produce the payslips and make your HMRC submissions on time. Someone still needs to create the banking file, check it, upload it and ensure every employee receives the right amount on payday.
The same challenge applies to supplier and other high-volume payments, where manual banking quickly becomes time-consuming.
An indirect Bacs service removes much of that administration. A Bacs Approved Bureau submits the payment instructions on your behalf, while the money moves directly from your business bank account to the recipients.
What is Bacs?
Bacs is one of the UK’s best-known systems for moving money between bank accounts. Bacs Direct Credit is commonly used for salaries, wages, pensions, supplier payments, expenses, refunds and other business transactions.
In fact, eight in ten UK employees are paid by Bacs Direct Credit.
Organisations can submit their own files directly through Bacstel-IP, the secure channel used to access the Bacs service. Alternatively, they can become an indirect submitter and use an approved bureau to submit files for them.
The official Bacs definition is straightforward: an indirect submitter uses a payment service provider or commercial bureau to submit its payment files.
The important point is that the bureau submits the instructions but does not need to hold your money. On payment day, your bank account is debited and the recipients are credited directly.
Can indirect Bacs be used without outsourcing payroll?
Yes. Although Bacs is widely used for payroll payments, it is not limited to payroll, and you do not need to outsource your payroll to use Ascend’s BACS service.
Ascend is accredited as a Bacs Approved Bureau, which allows us to offer a completely standalone indirect Bacs service. You can continue processing payroll internally or with another provider and use Ascend solely to create or submit the payment file.
We can also support non-payroll payments, including:
- supplier and contractor payments
- employee expenses and reimbursements
- pension and other third-party payments
- grants, rebates and refunds
- payments to businesses, franchisees or other beneficiaries
- other scheduled or high-volume Bacs Direct Credit payments
This can be particularly valuable for organisations making hundreds or thousands of payments each month. Instead of maintaining their own Bacs submission capability or manually uploading payments into online banking, they can use an accredited bureau to manage the submission.
How does indirect Bacs work?
The exact onboarding process depends on your bank, but it will normally involve the following steps:
- Apply through your bank. Ask your bank or sponsoring payment service provider for an indirect submitter application.
- Connect your Bacs details. Your bank will advise you about your Service User Number and authorise your chosen bureau.
- Complete a test payment. A small test file confirms that the arrangement is working before the first live submission.
- Prepare and approve the payments. Your authorised people check the payroll or business payment file and approve the total.
- Submit the file. The bureau completes its checks and submits the instructions securely through Bacstel-IP.
- Pay the recipients. Your account is debited, and the recipients are credited on the agreed payment date.
You retain control of the money and approve what is paid. The bureau manages the secure submission.
What is a Service User Number?
A Service User Number, usually shortened to SUN, is the unique six-character reference used to identify an organisation using Bacs services.
Your bank or sponsoring payment service provider will confirm what your organisation needs. As part of an indirect Bacs setup, it will authorise the approved bureau to submit files connected with your arrangement.
How long do Bacs payments take?
Bacs Direct Credit uses a three-working-day cycle:
Day 1 – the payment file is submitted to Bacs (submission day)
Day 2 – The instructions are processed and sent to the relevant banks (processing day)
Day 3 – Your account is debited, and the recipients’ accounts are credited (payment day)
For example, if employees or suppliers need to receive payment on Thursday, the file would normally be submitted on Tuesday. Wednesday is the processing day and Thursday is the payment day.
Only bank working days count, so weekends and bank holidays can bring submission deadlines forward.
What are the benefits of indirect Bacs?
Less administration
There is no need to rekey hundreds of individual payments or manage a separate online banking upload after the file has been approved.
Fewer opportunities for error
Using an approved file reduces duplication and helps keep the authorised payment data aligned with what is submitted to the bank.
Your money stays in your account
The bureau does not need to receive the total into its own bank account. Your organisation retains the funds until they are debited on payment day.
Stronger controls
A managed service can provide documented approval stages, separation of duties and a clear audit trail. The people preparing a file should not be able to release it without the appropriate authorisation.
Easier to scale
Indirect Bacs can support growing businesses, multi-site employers and organisations processing large volumes of payments without turning each payment date into a major banking exercise.
Is indirect Bacs secure?
Security depends on the payment system and the controls around it. That includes who can change bank details, who approves the payment file and how exceptions are handled.
Choosing a Bacs Approved Bureau matters because approved bureaux are reviewed by Pay.UK’s Third Party Assurance team to ensure they meet the required standards.
Before choosing a provider, ask:
- Will our money remain in our own bank account?
- Who can create, approve and release the file?
- Is a test payment completed before going live?
- What are the cut-offs around weekends and bank holidays?
- What reports and submission evidence will we receive?
- What happens if an error is discovered?
Is indirect Bacs right for your organisation?
It may be worth considering if you:
- manually enter or upload payments through online banking
- process a large number of payroll, supplier or contractor payments
- run several payrolls, sites or employing entities
- want clearer separation between preparation and approval
- need an accredited bureau without changing your payroll provider
- want one controlled process for recurring bulk payments
It may offer less value for an organisation making only a handful of payments where the existing process is quick and well controlled. It is also not intended for routine same-day payments because Bacs follows a three-working-day cycle.
How Ascend can help
Ascend Payroll is a Bacs Approved Bureau using the latest Bacstel-IP system.
For managed payroll clients, we can submit net pay and agreed payments to HMRC, pension providers and other third parties. Our controls include two-person sign-off before a payment file is released, together with a test submission before the first live payment.
We also offer a standalone indirect Bacs service. You do not need to use Ascend for payroll. If your organisation needs an accredited bureau to create or submit payment files for payroll, suppliers or other bulk payments, we can provide that service separately.
You approve the payments and retain control of your money. We manage the file and secure submission.
If you would like to find out whether indirect Bacs is suitable for your organisation, talk to the Ascend team. We can explain the setup, help with the bank application and show you how the service would work for your payment process.
