You have probably heard the terms BACS and CHAPS lots in banking, and they are often used as selling points for Umbrella Companies. BACS payments take three days to reach the recipients bank account from when they are made. Many agencies make payment to Umbrella Companies on a Wednesday so the funds clear into Umbrella Companies accounts on a Friday.

CHAPS payments on the other hand, reach the recipients bank accounts the same working day. If a payment is made by 4pm, it will be in the recipients bank account 2-6 hours later.

Another key difference between BACS and CHAPS payments is the cost. A BACS payment will cost a business just a few pence to make, whereas a CHAPS payment can cost anywhere between £25- £35. Umbrella Companies will often pass the cost of CHAPS payments onto their contractors and usually add a margin due to the increased work it will take for them to make a CHAPS payment.

When choosing an Umbrella Company, ask what their payment methods are. If they pay via BACS and your agency makes payment to them on a Wednesday, funds will reach the Umbrella’s bank on a friday, so will not be in your bank account until the following Tuesday at the earliest.

An increasing number of Umbrella are starting to make payments using Faster Payments (FPS). This method of payment costs only slightly more than a BACS payment and takes less than two hours to reach the recipients bank account. In many cases funds are cleared in less than 30 minutes. Some banks do not yet accept Faster Payments, so it is worth checking with your Umbrella Company.

Please note that Redego provides same day payments as standard and at no extra cost.