Bacs approved software or bureau: which does your business need?

Every business that collects by Direct Debit or pays by Bacs Direct Credit has to get its files to Bacs somehow, and there are two main ways to do it. It can run approved software itself, or it can use an approved bureau that submits for it. According to Pay.UK, "over half of the organisations making Direct Debit and Bacs Direct Credit submissions do so through an approved bureau".

What is the difference between Bacs approved in-house software and bureau?

With in-house software, your own staff produce, sign and submit your Bacs files and act on the reports. With a bureau, a specialist does that work for you. Both routes submit under your own Service User Number (SUN), and in both cases the mandates and the relationship with your sponsoring bank remain yours.

Bacs approved software gives your finance team complete autonomy when submitting files. Your staff hold the signing credentials, schedule the submission dates of all files, and will need to action reports as often as they can. 

A Bacs approved bureau submits under your SUN through its own approved software and its own certificate, watches the deadlines and can deal with the reports. Our guide to what a ‘Bacs approved bureau does’ covers the mechanics, and our overview of the layers of Bacs payment services shows where submission sits among everything else.

Which question decides it?

One question: does your business have the internal resource and expertise to run Bacs submissions? If it does, in-house software fits. If it does not, a bureau service is the wise choice. Most of the other considerations, including cost, follow from the answer.

Bacs frames it in similar terms. Its guidance for new users says direct access "may be faster and cheaper than using a bureau where you will be processing a high volume of payments", while indirect access through a bureau "is often the most suitable method for smaller organisations or those with a limited number of payments". Volume matters, but only because volume changes what the resource is worth.

How do you test whether you have the resource?

The test is practical rather than theoretical. "We have a finance team" is not the same as "we can run Bacs". These four questions tend to stress-test before deciding:

1.    Who owns the payment calendar?
Someone has to know, for every collection and every payment run, the date the file must reach Bacs. That person needs to own it, not just be aware of it. If the honest answer is "whoever remembers", that is a sign the resource is not there yet. Also consider the additional complexities of Bacs non processing days, cut-off times, and the three-day cycle, when determining whether you have the internal capability required for software submission. 

2.    Does that person understand the three-day cycle?
Bacs works on a three-day cycle of input day, processing day and entry day. A file submitted on Monday is processed on Tuesday and the money moves on Wednesday. Miss the input day and every payment in the file arrives at least one working day late, and longer over a bank holiday. For collections that is a cash-flow problem. For salary payments, it means your staff receive their wages late.

3.    Who renews the certificates?
In-house submission is signed with a digital certificate, held on a smartcard issued through your sponsoring bank or in a hardware security module. These certificates carry an expiry date, and an expired certificate will prevent you from processing submissions until it is replaced. Someone has to know when that date falls and start the renewal in time. With a bureau, both the certificate and its renewal belong to the bureau. 

4.    Can you run it with one person off sick?
This is the question that settles it for many businesses. Holiday seasons is when single points of failure show themselves. If Bacs depends on one trained person, and that person is on leave when their only cover is ill, the file either goes late or does not go at all. In-house software works well when there are at least two people who can run a submission. Where there is only one, a bureau is usually the safer choice.

How do the two routes compare?

The routes differ less in what they achieve than in who carries the work and the risk.

What does each route cost?

The two routes have different cost shapes, which matters more than any headline price. A bureau charges per transaction, with set-up fees or a monthly minimum, so its cost rises with your volume. Software is a licence that stays largely fixed as volume grows, plus the staff time to run it.

That personnel cost to the employer is the cost most comparisons leave out. Running Bacs in house means hours every week for the submission, the reports and the reconciliation, plus a second person trained to cover. Installed software also needs IT support. At low volumes the bureau is often cheaper once staff time is counted. At higher volumes the fixed licence starts to win, and there is a crossover point for every business. 

What if you do not have a Service User Number?

Neither route works without one. A bureau submits under your SUN and cannot lend you its own, and software needs your SUN to submit at all. The service user number comes from a sponsoring bank, which checks what Bacs describes as your "integrity, financial standing and administrative capability".

If you have not applied yet, start there. Our guide to how to get a Service User Number covers the application, and a Bacs approved bureau can help you prepare one. Bear in mind that from 1 July 2027, new SUNs are AUDDIS only.

If your bank has declined your SUN application, you still have the option of a facilities management submission – this is where a provider will allow you to submit under their service user number. We do not offer this directly, but we do have a specialist partner that we are more than happy to refer you to. 

Is the choice permanent?

No. Neither route is permanent. Businesses move from a bureau to their own software as volumes grow, and back again when a team shrinks. Because your SUN and your mandates are yours, they move with you and your payers do not need to sign anything new.

That makes the decision lower stakes than it can feel. The right question is which route suits the business you are now, not the business you might be in five years. When the answer changes, the route can change with it, and a later article in this series will explain how to tell when that point has arrived.

What should you do next?

• Name the person who owns your payment calendar, and the person who covers them. If you cannot name the second, treat that as your answer for now.

• Write down this year's collection and payment dates alongside the bank holidays, and check whether each input day has someone available to submit.

• Find out who holds your signing certificate and when it expires, if you already submit in house.

• Estimate how many hours a month submissions, reports and reconciliation take your team, and include that when you compare prices.

• Check that you hold your own Service User Number. If you do not, decide whether to apply now or use a route that does not need one.

Interbacs: both routes covered

Interbacs has supplied Bacs software and bureau services to UK businesses since 2003, and holds both Bacs Approved Software and Bacs Approved Bureau status. Because we supply both, we have no reason to steer you one way, and if the bureau suits you better than our software, or the reverse, we will say so. The same InterPass identity verification is built into both routes.

If you want to test the resource question against your own calendar, our team will go through it with you, and if the answer changes later, you can move between the two without losing your mandates.

Looking for support? Get in touch with our expert team for a friendly chat to see whether software or a bureau fits.

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