What Is BACS and How Does It Work? Simple Guide for UK Sole Traders
Introduction
If you've ever been paid by bank transfer in the UK, there’s a good chance the payment went through BACS — one of the most widely used payment systems in the country. Whether you run a small business, freelance part-time, or simply need to understand your clients' payment methods, knowing what BACS means is incredibly useful.
This guide explains:
- what BACS is
- how BACS payments work
- how long BACS transfers take
- how they compare to Faster Payments and CHAPS
- and what UK sole traders should know about receiving money this way
What Is BACS?
BACS stands for Bankers' Automated Clearing Services.
It’s a UK banking network that processes two types of payments:
- BACS Direct Credit — most relevant for sole traders (used to pay you)
- BACS Direct Debit — used by businesses to collect payments from customers
BACS is known for being reliable, low-cost and widely accepted, but it’s not the fastest method — as explained below.
How Do BACS Payments Work?
When someone pays you via BACS Direct Credit:
- The payer’s bank sends the payment instruction
- The payment enters the BACS network
- It is processed overnight
- The money arrives in your bank account on the third working day
This is why clients often say things like:
- “BACS takes three days”
- “We’ll pay you by BACS on Friday so it arrives Wednesday”
How Long Does a BACS Transfer Take?
The standard timeline is 3 working days
- Day 1: Payment is submitted
- Day 2: BACS processes the payment
- Day 3: Funds arrive in your account by around 7am
Weekends and bank holidays do not count as working days.
Example:
If a client sends a BACS payment on Friday, you’ll usually receive it on Wednesday.
BACS vs Faster Payments vs CHAPS
Here’s how BACS compares to other UK payment systems:
| Payment Type | Typical Speed | Cost to Use | Best For |
|---|---|---|---|
| BACS | 3 working days | Very low | Payroll, bulk payments, standard business payments |
| Faster Payments | Seconds–2 hours | Free (usually) | Everyday transfers, urgent payments |
| CHAPS | Same day | £20–£30+ | Large transactions (e.g., house purchases) |
For sole traders, most client payments will be either BACS or Faster Payments.
Why Would a Client Use BACS Instead of Faster Payments?
Even though Faster Payments are instant, many companies still use BACS because:
- It’s the standard method for payroll
- It’s cheap for large businesses
- It fits their internal accounting processes
- It works well for recurring or scheduled payments
- Some corporate finance teams batch payments once per week
If you're asking a company when you’ll get paid, always ask:
“Will the payment be BACS or Faster Payments?”
It makes a big difference to when you’ll see the money.
What UK Sole Traders Should Know About BACS Payments
You don’t need to “set up” BACS
Payments are sent to your standard bank account — no special setup required.
You may need to wait longer for funds
Because BACS can take 3 working days, it’s worth planning ahead for:
- rent
- supplier invoices
- tax bills
- cashflow gaps
Tools like QTax help you stay organised so deadlines don’t catch you off guard — see the Product Tour.
BACS payments are reliable and widely used
Large companies, councils, agencies and corporate clients use BACS as their default payment method.
Faster Payments are becoming more common
Smaller clients and individuals often prefer Faster Payments because they’re instant.
Common Questions About BACS
Is BACS safe?
Yes — BACS has been used in the UK for over 50 years and processes millions of payments each day.
Can I receive BACS as a sole trader?
Absolutely. Any UK bank account can accept BACS transfers.
What time do BACS payments clear?
Usually early morning on the third working day (between 1am–7am).
Why is my BACS payment delayed?
Possible reasons:
- Non-working days (weekends/bank holidays)
- Payment submitted after bank cut-off
- Incorrect bank details
How QTax Helps With Payment Organisation
While QTax doesn’t process payments, it does help sole traders stay financially organised so tax deadlines never become stressful — especially if you rely on client payments to stay on schedule.
QTax provides:
- clear guidance on expenses
- helpful reminders for deadlines
- step-by-step Self Assessment support
Learn more in the Product Tour
or view our simple Pricing.
Conclusion
BACS may not be the fastest payment method in the UK, but it remains one of the most widely used — especially by larger businesses. Understanding how it works helps you manage your cashflow, set expectations with clients and avoid surprises.
If you want to stay in control of your finances and file your tax return stress-free, QTax gives sole traders a simple, reliable way to get everything sorted on time.
Ready to file your Self Assessment the easy way?
Start your 30-day free trial with QTax.