If your business wants to offer Bacs services, including Direct Debit payment options for your customers, being sponsored by your bank is usually the primary method, this does however, come with some significant eligibility criteria. According to Pay.UK’s figures, there are approximately 117,000 organisations who are identified as Bacs service users in the UK.
Bacs services typically include Direct Debit and Direct Credit transactions. In general, there are all types of organisations that have integrated these payment methods into their internal payment infrastructure, including UK charities, government departments, financial institutions, membership based businesses, some SMEs and typically most larger companies.
In order to access Bacs services, your business will need a Service User Number or SUN. In this article, we explain what a Service User Number is, why your business may need to apply for one and the key benefits you can expect from obtaining a Service User Number.
Contents
- What is a Service User Number?
- Who uses a Service User Number?
- What are the benefits of having a SUN?
- Get expert Bacs support with Interbacs.
What is a Service User Number?
A Service User Number or SUN, is a completely individual and unique number, usually consisting of six digits, that is awarded to an approved business by their sponsoring bank. This identifier enables Bacs to pinpoint the business & relevant account (s) paying Bacs credits, such as payroll, supplier payments or receiving Direct Debit transactions.
Being able to operate within this system autonomously, or else by using a Bacs approved bureau, strictly requires a bank-awarded SUN. The only alternative method available to receive Direct Debit payments from clients or customers without having your own SUN, is by using a SUN granted to you by a third party provider (Direct Debit Facilities Management - Or FM).
The SUN is used to route payments to Bacs and generate records & reports regarding each transaction, typically linking these to payee and payer, therefore providing a data store for compliance purposes and for transparent, reliable business accounting.
Many financial organisations, including banks, will use the individual SUN to verify the correct organisation is receiving the right Direct Debit payment and the business name relating to the SUN will appear on the payer’s bank statement.
If an error occurs in a Bacs payment and the payment amount has to be repaid to the payer, then the SUN will be used as an identification method for the business that is responsible for the chargeback payment.
Who uses a Service User Number?
Any organisation that wants to operate using Bacs payments, such as Direct Debit or Direct Credit, must have access to a Service User Number. This can either be their own, which their bank has awarded to them, or one that is shared by a third party FM provider who have been awarded SUNs by their bank and have been approved by Bacs.
It can take anywhere from two to ten weeks to obtain a Service User Number from your sponsoring bank. Only UK banks can normally provide SUNs although international banks who have UK customers can provide their business customers with SUNs from partner banks who are part of the scheme. This is because there has to be a full review & application process for any business requesting a SUN, to ensure that it complies with Bacs’ rigorous standards, can cover the indemnity risk, the completion of setup processes and follow the Bacs Service User Guide rules.
If you have a substantial business with internal finance teams, it may make sense to have your own SUN (or SUNs) so that you can process Direct Debit payments in-house. In this instance, your business has to organise Direct Debit setup, obtain Direct Debit Instructions, share these with Bacs and manage the entire Direct Debit cycle usually with a Bacs approved software provider or Bacs approved Bureau. Having your own SUN and using Bacs approved software is much more cost effective and provides more agility for internal integrations.
However, for enterprises that are smaller, have just been established or are looking to focus on other business priorities, being able to use a third party SUN can help streamline the payment process while supporting stronger security and compliance operations. It is not always abundantly clear why the bank would not grant a SUN but Facilities Management is always an option.
What are the benefits of having a SUN?
If you operate in the Direct Debit or Direct Credit payment environments, then having your own SUN or access to a third party’s SUN is essential. You won’t be able to interact with Bacs or process Bacs payments without this.
Whether you have your own SUN or are working with a Bacs-approved bureau, here are some key benefits of having a SUN:
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Flexible payments
With Direct Debit payments, you can collect any amount approved by the payer on a regular or one-off basis. The system enables the payer and receiving business to amend their Direct Debit at any time as long as the customer is given the correct advance notice period,, providing convenience for all stakeholders.
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Reduced churn
Direct Debit payment statistics remain consistently high and are growing in popularity. Customers are typically satisfied with the process and many state they find the system trustworthy and safe to use. As a result, people are less likely to stop paying by Direct Debit as once these are set up, the payer doesn’t have to worry about extra arrangements.
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Increased control & Autonomy
With a SUN that is either your own or from a Bacs approved bureau, there is the added sense of control when it comes to cash flow. Approved Direct Debits equal predictability of financial streams, enabling you to complete financial forecasting more accurately.
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Enhanced security
The whole Bacs system is founded on rigorous standards and strong security protocols, including encryption, meaning that your funds are protected within the system. This is important for businesses who rely on a fluid cash flow to fund daily operations and the achievement of strategic goals.
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Improved compliance
When you're a part of the Bacs payment system, you can receive a whole raft of reports, including the ARUDD (Automated Return of Unpaid Direct Debits) report. These reports can be integrated into your records to ensure transparency of accounting, as well as programmed to reattempt collection if appropriate, helping you to maintain compliance with essential regulations.
Get expert Bacs advice with Interbacs
Given our extensive Bacs experience, we can offer you a flexible range of support options. Not only are we a Bacs approved bureau that ensures secure and compliant payment management, we’re also a Direct Debit Facilities Management service that can handle your entire payment process.
Leading the market in Bacs payment management and Bacs approved since 2013, we effectively support businesses of all types and sizes to enhance their payment processing options.
Combining 30 years of experience, we deliver BACS software solutions with a friendly, reliable and professional approach. We’re here to help you optimise B2B payment processes for operational excellence and efficiency.
Contact us today to find out more about how we can help you save time and money on your payment solutions.
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