BACS (BAB) License Process

[Mikeyabosbht1986]

Hi Guys,

Just seeking greater clarification re: The BACS Bureau Licence process from the perspective of a new Payroll Bureau that will administer third-party payments.

Assuming I meet criteria and accreditation to obtain the license and hold BAB (BACS Approved Bureau) designation, I still have a few queries regarding how the process works and I hope someone can help, please.

I am currently seeking a greater level of understanding regarding the submissions of financial transactions through the BACS clearing system on behalf of external third party legal entities: Could I please query how the money flow process works to support third-party payments?

Would clients make deposits into our business bank account in preparation for us making wage payments on their behalf? Would our company hold the actual cash / client monies and then transfer wage payments owing as required?

OR

Does the client retain funds in their account, and we give instruction to the client bank account to pay their staff – so money is still held with the client at all times and we raise payment through authorisation with the client? Or, is there an alternative process?

Any experience or knowledge on the matter, would be greatly appreciated.

Many thanks, M

 

[Scalloway]

If clients are giving you money to pay out on their behalf you need to have a separate client account for the purpose.

 

[Mikeyabosbht1986]

Thanks, Scalloway.

From my understanding, in order to submit financial transactions through the Bacs clearing system on behalf of external third parties requires registration to become a Bacs Approved Bureau (BAB). Once this is complete, a new potential client will need to contact their bank and request an indirect submitters form. The client will need to supply their bank with the Payroll Bacs Approved Bureau "BUN/ Bureau User Number". This is a list of BAB stored and approved by BACS.

The client will need to request a Bacs Service User Number (SUN). The SUN is the originator ID. This is a unique six-digit number used to identify the client business paying or receiving money through a Direct Debt BACS transaction. Obtaining a SUN takes normally takes around 1-3 months requiring the bank to perform due diligence on your business in terms of creditworthiness.

The client business then needs to supply the SUN to the Payroll BAB. Once the payroll BAB is in receipt of the SUN this provides the BAB with requisite authority to make payments on behalf of the client business.

Still not sure how the payment flow process works and whether we wait to receive a deposit from the Employer and so hold funds in a separate client account Or funds are retained with the employer at all times and a submission file is sent?