Umbrella companies use three main payment methods to pay their contractors. The method used will determine how quickly payments hit your account, and you may incur additional charges depending on the scheme you join.
BACS stands for Bankers’ Automated Clearing Services. This is the most commonly used method of transferring funds between different banks. You should expect to wait 3 working days to receive money from your umbrella
FPS stands for Faster Payments Service. This much needed system has been slowly introduced since 2008, and speeds up payments between different banks for no extra charge. With banks raking in billions each year as a result of the traditional payment delay created by the BACS system, it would appear that some are dragging their heels to fully roll out FPS, although fill UK wide adoption of the system does seem inevitable in the end.
CHAPS (Clearing House Automated Payment System) is the term given to same day payments. This service is usually chargeable, with some banks charging customers up to £35 for the privilege of using CHAPS. Mass users of the system do qualify for bulk discounts which umbrella companies may or may not pass on to contractors who request same day payments. Some umbrella companies include CHAPS payments in their normal fees.
When you research the umbrella market, find out how often the firm runs its payroll (this can vary from once weekly to every day in some cases), and how much they charge for processing CHAPS payments.
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- ClearSky Accounting - specialist support for contractors
- Visit Hiscox for Professional Indemnity and Business Liability Insurance
- Contractor Finance - up to £30,000, when you need it
- InTouch Contractor Accountants - Personal Online Accounting
- Join PCG - Free impartial start-up advice for contractors.
- Visit Qdos Consulting for tax investigation cover and IR35 insurance.
- 90% Pay Retention for Contractors - Helix Management Ltd