BACS payments for payroll: setup and timing

Most UK employers pay employees via BACS — the Bankers Automated Clearing Service. BACS transfers are processed in batch, take three banking days to settle, and are the standard method for bulk payroll payments. Understanding the BACS processing cycle and how it interacts with your payroll run prevents the most common payroll problem: employees being paid late.

The BACS three-day cycle works as follows: a payment submitted on Day 1 (the input day) is processed overnight, reported on Day 2, and credited to the employee's account on Day 3 (the entry day). Banking days exclude weekends and Bank Holidays. If your payday falls on a Bank Holiday — for example, the August Bank Holiday — and you submit on Friday, the payment will not arrive until the following Tuesday. For monthly paid staff expecting money on the 31st, a Tuesday arrival after a Bank Holiday weekend is a problem.

The practical rule is: work backwards from your intended payday. Count three banking days, identify the submission date, and make sure your payroll is finalised and submitted by that date. For a payday of the 25th, submit on the 22nd (assuming no Bank Holidays intervene). Most payroll software — and Mellow — can be configured to prompt the submission at the correct point.

Setting up BACS requires a BACS-approved service. Employers cannot submit BACS payments directly — they go through a BACS-approved software provider or bank. Most payroll software integrates with BACS bureau services. Alternatively, many high-street banks offer a bulk payment service for business accounts that handles the BACS submission on your behalf. The bank route is simpler but slightly more expensive; the bureau route is more flexible for high volumes.

What if an employee changes their bank details? Bank detail changes in payroll must be verified carefully. A fraudulent bank detail change — where an attacker changes an employee's bank details to redirect salary — is one of the most common payroll frauds. The process should require the employee to submit the change in writing (or through a secure self-service portal with their own login), and the change should be confirmed by someone other than the person who input it. A call-back to the employee on a known number before applying a change is good practice.

For businesses that pay weekly or fortnightly rather than monthly, the BACS cycle and submission schedule is the same — it just runs more frequently. Ensure your payroll system can handle weekly or fortnightly runs, and build the three-day lead time into every cycle.

If you use Accounted for bookkeeping, BACS payment files can be reconciled against bank statements automatically — linking the payroll payment to the accounting entry.

See our running your first payroll guide for the full sequence, and the UK payroll calendar 2026-27 for Bank Holiday-adjusted payment dates.

Mellow calculates BACS submission dates automatically based on your payday and Bank Holiday calendar. [Start a free trial →](https://mellowhr.com/register)