BACS, Faster Payments and CHAPS: when is a UK invoice really late?
A customer says they paid on the due date. Whether that is on time depends on how they paid and what day it was. A short guide to the dates before you send a reminder.
"We paid it on the due date" is often true and still means the money is not with you yet. In the UK the date a payment is made and the date it arrives can be different, and that gap decides whether your reminder is fair.
This is general guidance from a software company, not legal advice. Check your bank's own timings, because they vary.
The three common methods
- **Faster Payments.** Usually arrives within seconds, and in any case within a couple of hours, any day of the year. It is the default for most online banking transfers.
- **BACS.** Takes three working days: submitted on day one, processed on day two, available on day three. Many payroll and supplier runs use it, and large customers' payables teams often pay this way.
- **CHAPS.** Same-day, within the bank's cut-off, on working days only. Used for large or urgent sums.
Working days exclude weekends and bank holidays. A BACS payment sent on a Thursday before a bank holiday weekend can land after the following Tuesday.
Work out the real date
If the invoice is due on a Friday and the customer pays by BACS on that Friday, you will not see the money until the middle of the following week. A reminder on the Monday would be wrong, and it would tell the customer you do not understand how they pay.
A simple rule: do not chase until a working day or two after the due date for Faster Payments, and until four or five working days after for a customer you know pays by BACS. Put it in your terms so it is agreed.
Put the payment method on the invoice
State which method you prefer and give the bank details. A customer who pays by the method you asked for is easier to trace. Ask for a remittance advice, an email saying what was paid and for which invoices, because it lets you match a payment that arrives with no reference.
Check your bank before you write
Before you send a reminder, look at the bank feed for anything that matches. A payment with the wrong reference, or one that came in as a lump for several invoices, is the usual cause of a customer who "has already paid". See unapplied payments and credit memos for how it shows up in QuickBooks.
Where Mugavi fits
You choose when each step of a schedule goes out relative to the due date, so you can leave a few days for a slow payment method. There is also an option for a heads-up before the due date that never calls the invoice overdue. Nothing is sent until you approve it, and after you press send there is a 30-second window to change your mind. Mugavi does not see your bank feed, so it reads what has been recorded in your books. If a payment has arrived but not been recorded, record it first.
If late payments keep coming from unclear due dates, UK invoice payment terms that make a late invoice easier to chase covers what to put on the invoice.