Wrong account: a Bacs Direct Credit returned through the cycle
Trigger: On entry day the payee account details are wrong or the account is closed, so the credit cannot be applied.
What operations sees first: A payroll credit does not reach the employee; the item comes back to the employer through the Bacs cycle, not instantly.
WHERE IS THE MONEY?
Returned to Asha Traders after the Automated Return worked back through the cycle — the employee was never credited.
DID SETTLEMENT HAPPEN?
The original entry settled on Day 3; the return is reversed through a later cycle, not instantly.
WHO ACTS NEXT?
Nordbank (payee bank) Asha Traders corrects the employee's sort code and account number and resubmits on the next cycle.
PLAY THE EXCEPTION
Trigger: On entry day Nordbank finds the payee's account details are wrong or the account is closed, so the credit cannot be applied.
Day 1 — Asha Traders submits the Bacs payment file
Asha Traders (employer) → Bacs (Pay.UK) · Bacs Standard 18 payment file
On Day 1 the employer sends its payroll file to Bacs through its bank. This is an instruction to pay, not money moving — it enters the fixed three-working-day cycle. Bacs is a batch system, so the file waits its turn.
Step 1 of 6: Day 1 — Asha Traders submits the Bacs payment file
- 02ProcessingDay 1 — Bacs validates and accepts the fileBacs (Pay.UK)
- 03Clearing obligationDay 2 — Bacs processes the file and passes entries to the banksBacs (Pay.UK) → Nordbank (payee bank)
- 04 · EXCEPTION PATHProcessingDay 3 — Nordbank cannot apply the creditNordbank (payee bank)
- 06 · EXCEPTION PATHPostingAsha Traders is re-creditedBank Alfa (payer bank)
- OUTCOME
- Funds
- Returned to Asha Traders after the Automated Return worked back through the cycle — Riya was never credited.
- Settlement
- The original entry settled on Day 3; the return is reversed through a later cycle, not instantly.
- Who acts next
- Nordbank (payee bank) — Asha Traders corrects Riya's sort code and account number and resubmits on the next cycle.
Full step-by-step text (works without JavaScript)
- 02ProcessingDay 1 — Bacs validates and accepts the fileBacs (Pay.UK)
Bacs checks the file's format and account details and accepts it into the current cycle. Acceptance means the payments are scheduled for the three-day rhythm — still no money has moved anywhere on Day 1.
- 03Clearing obligationDay 2 — Bacs processes the file and passes entries to the banksBacs (Pay.UK) → Nordbank (payee bank)
On Day 2 Bacs sorts the file and passes each entry to the paying and receiving banks so they can prepare. These entries are obligations for the next day, not yet money — the banks know who will owe whom on entry day.
Day 2 produces obligations, not funds. The banks now hold the entries and know what they must debit and credit on Day 3, but nothing has actually been paid.
- 04 · EXCEPTION PATHProcessingDay 3 — Nordbank cannot apply the creditNordbank (payee bank)
The account number does not match an open account, so Riya cannot be credited. Because Bacs is a batch cycle, the item is not bounced instantly — it is packaged as an Automated Return to travel back through the scheme.
- 06 · EXCEPTION PATHPostingAsha Traders is re-creditedBank Alfa (payer bank)
Once the return works back through the cycle, Bank Alfa re-credits the employer for the amount that could not be paid, with the reason code available so the payroll details can be corrected.
- CR Asha Traders' account at Bank Alfa — GBP 3,200.00
- OUTCOME
- Funds
- Returned to Asha Traders after the Automated Return worked back through the cycle — Riya was never credited.
- Settlement
- The original entry settled on Day 3; the return is reversed through a later cycle, not instantly.
- Who acts next
- Nordbank (payee bank) — Asha Traders corrects Riya's sort code and account number and resubmits on the next cycle.
THE TIMELINE
- 01Asha Traders (employer)Submits the Bacs Direct Credit payroll file on Day 1.Bacs Standard 18 payment file
- 02Bacs (Pay.UK)Processes the file on Day 2 and passes entries to the banks for entry day.
- 03Nordbank (payee bank)On Day 3 finds the account details invalid and raises an Automated Return through the Bacs cycle rather than bouncing it instantly.
- 04Bank Alfa (payer bank)Re-credits Asha Traders once the return works back through the cycle, with a reason code to fix the details.
Resolution: Because Bacs is a batch cycle, a failed credit returns through the same predictable multi-day rhythm as the original payment. The employer is re-credited and corrects the details for the next cycle.
Sources for this scenario2
- Scheme-specific rule
Bacs (Direct Debit and Direct Credit) ↗ — Pay.UK · Automated Returns
Bacs runs a fixed three-day cycle: day 1 submission, day 2 processing, day 3 debit and credit taken together. Direct Debit adds days 4-5 for the Automated Return of Unpaid Direct Debits (ARUDD).
- Simplified educational illustration
Payments Signal editorial teaching models — Payments Signal
What this simplifies: Single-cycle teaching model; participant-specific handling and exact cut-offs vary.
Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.