How to choose a payment method
Speed, cost, safety and proof: weigh the four and pick the right way to pay or to be paid.
In this room: 3 tasks, 10 questions
- Four things to weigh4 questions
- The cost of paying suppliers4 questions
- Being paid safely2 questions
- Speed: when must the money arrive?
- Cost: what does the bank or the provider charge?
- Safety: could the money be lost, stolen or returned unpaid?
- Proof: is there a record that the payment was made?
| Method | Speed | Good for |
|---|---|---|
| Cash | At once | Small sales over the counter |
| Cheque | Clears the next working day | Payers who do not bank online |
| BACS | Three working days | Wages and supplier payment runs |
| Faster Payments | Usually minutes | One-off payments needed today |
| CHAPS | Same working day | Very large, urgent payments |
| Standing order | On the set date | Regular fixed amounts |
| Direct debit | On the collection date | Regular bills that change |
Every bank method leaves a record on the bank statement. Cash leaves none, so it needs a receipt. Cash can also be lost or stolen, and counting and carrying it takes time.
Answer the questions below
3 more questions follow in this task.
Fernhill pays 40 supplier invoices a month. It could post a cheque for each one, or pay them all by BACS.
| Method | Bank charge | Stamp and envelope | Total |
|---|---|---|---|
| Cheque | 0.65 | 1.20 | 1.85 |
| BACS | 0.35 | 0.00 | 0.35 |
Answer the questions below
3 more questions follow in this task.
A seller should ask one question before the goods leave the shop: is the money certain yet?
- Cash is certain once it has been counted
- A bank transfer is certain once it shows in the seller's account
- A cheque is not certain until it has cleared
Answer the questions below
1 more question follows in this task.