The thought that the payroll file might not get processed properly is something that keeps many FDs and CFOs up at night and any financial leader worth their salt will have an alternative to BACS .
There’s a sinking feeling you get when you realise that your payroll BACS payment file has been rejected and unfortunately that happens more than you might think.
BACS is a pretty stable system but any errors in the input file and you could find that your file rejects with no warning.
Due to the long lead times, it could end up with you paying some of your people late or even worse - missing payday for your entire company.
So what can you do? Well, the good news is that we have a great BACS alternative that can provide you with the perfect contingency.
There are a number of reasons why BACS files might be returned and any one of these can cause serious problems for your payroll.
This happens when you don’t have input rules in your source system.
BACS files are formatted using the Comma Separated Values (CSV) format and each comma denotes a new column. Add in an extra comma where there shouldn’t be one and all of the following columns will be out of sync.
Typically this happens when you produce your CSV file and then someone opens it up in Excel, makes changes and saves it again.
Often Excel will reformat the file so that those vital commas are stripped out. No commas, no BACS file.
Again down to the input system.
If you put in an account number that doesn’t exist or a sort code with a typo then you are in trouble.
Some data fields are optional but some are crucial for the orientation of the payment such as Name or Account number.
If one of these is missing then you could get a rejection.
Most BACS systems are pretty stable but if you have an update or your system goes down for some reason or another then your BACS process could be the fallout.
The AUDDIS (Automated Direct Debit Instruction Service) file shows changes to the status of a direct debit instruction. If you have a value here of anything other than a zero then there’s trouble ahead.
Hopefully, the system that you use to input your BACS instruction is smart enough to spot when there’s a problem.
If this is the case then it will alert you and you can make the required changes and send again.
But many systems are ancient and don’t have that capability. The BACS file is sent and you just have to wait and see whether it gets actioned or not.
The problem here is that BACS lead times are pretty long and so by the time you find out there is a problem it is too late to do anything about it.
One of two possible scenarios will then result; you miss paying one or more people or even worse, your entire payroll gets rejected.
Any sensible CFO knows that they have to have a contingency plan for their critical systems.
So the trick is to have a back up process that is ready to go at a moment’s notice.
You could of course simply ask someone to manually enter each payment into your online banking platform although for all sorts of compliance reasons that isn’t ideal.
It also takes forever.
The alternative is to use a modern, flexible and rapid Faster Payments solution like Caxton.
You can process anything from a single payment or a batch of say 1,000 instructions and because it uses the Faster Payment process it is lightning-quick.
This means that within minutes of discovering that your BACS file has been rejected instant salary payments can be winging their way to your people, your staff will be paid correctly, on time and they will never know there was a problem!
The system is quick to learn, simple to use and the best thing is that it can often be cheaper than sending your payments through BACS.
We know that not all CFOs are ready to make the move away from their legacy systems and so the BACS payment method will remain their default platform.
But it makes total sense to implement a backup for those odd times when it goes wrong or when you need to make a quick Faster Payment.
Why not book a demo now and see just how revolutionary Faster Payments through Caxton can give you peace of mind?