How paying suppliers by BACS file from Zoho Books works
Paying suppliers by BACS file from Zoho Books takes three steps. You bulk select the bills you want to pay under Purchases > Bills. You click Generate BACS File. You then import the file into your bank. Once the run clears, the bills are marked paid, either when you generate the file or when you record the payments yourself.
A BACS file is a structured file of payment instructions that your bank reads and submits to the Bacs scheme for you. Zoho Books for UK businesses builds that file from the bills you select and from the bank details stored against each vendor. Nobody keys the payments into online banking one by one, so a run of many suppliers takes the same effort as a run of a few.
This guide follows the route from first principles. It covers four things:
- the settings Zoho Books needs before the first file
- the choice between the two generate buttons
- what sits inside the file
- the checks to run before your first live payment run
It ends with the questions to settle with your bank, because your bank decides when a supplier actually receives the money.
Bills, BACS, sort codes and the service user number defined
Four terms carry the whole BACS payment process in Zoho Books, and the software uses each of them precisely. Here they are:
- Bill. Zoho Books defines a bill as a document that indicates the amount you owe your vendors for the goods or services you buy from them. Zoho Books calls suppliers vendors throughout.
- BACS. Bankers Automated Clearing System, the UK payment system for bank transfers.
- Service user number (SUN). A unique six-digit number that Bacs assigns to your organisation for identification. Zoho Books needs it before it can build a file.
- Sort code. A unique six-digit number that identifies a bank or payment institution during a transfer. Each vendor needs one, alongside an account number.
A supplier run from Zoho Books sits on the credit side of the scheme. The payment records Zoho Books writes carry transaction code 99, which marks a Bank Giro Credit. In plain terms, you are pushing money out to suppliers rather than collecting it from customers.
Setting up Zoho Books before the first BACS file
Zoho Books needs two kinds of data before it can build a BACS file: your organisation's service user number and each vendor's bank details. If either is missing or wrong, the run stops or the money goes to the wrong place. Set both up before your first payment day.
Your service user number
If no SUN is on record when you generate a file, Zoho Books asks you to click Update Now and enter it. You can edit it later on the Profile page under Settings. Check the six digits against your bank's own paperwork rather than a colleague's memory.
Vendor bank details
You enter each vendor's Account Number and Routing Number / Sort Code in the Transaction Details section. If your vendors use the Zoho Books vendor portal, they can also check and update their own personal and payment details. Zoho Books keeps that information synchronised with the portal.
Portal updates save keying, but they also mean a sort code can change without anyone in finance typing it. Decide who reviews such changes before the details reach a payment run.
Branches
If you have enabled Branches for your organisation, you select the branch used to track each payment. Agree in advance which branch each supplier run belongs to, so that your branch reports stay accurate.
Generating the BACS file from approved bills, step by step
Generating a BACS file in Zoho Books starts from the bill list, not from the payments screen. Follow these steps in order:
- Go to Purchases > Bills.
- Narrow the list to the bills you have agreed to pay. Zoho Books offers filters, custom views, sorting and a calendar view for bills.
- Bulk select the bills you want to pay using a BACS file.
- Click Generate BACS File at the top of the page.
- Enter the SUN if prompted, confirm each vendor's account number and sort code, and pick the branch if Branches are on.
- Choose Generate or Generate and Record Payment.
- Import the file into your bank account and approve the run through your bank's own process.
Two habits make step 3 safer. First, apply any vendor credits before you select the bills. Zoho Books lets you apply credits to a bill, so the amount you pay reflects credits the supplier has already given you. Second, set an expected payment date on each bill. A custom view or the calendar view then shows exactly which bills fall into this run.
A clean BACS file also depends on clean bills. If your bills arrive through Autoscan in Zoho Books, check the amounts and tax lines before you approve them. An error that reaches the payment file reaches the supplier's bank account too.
Generate or Generate and Record Payment: when bills are marked paid
The two buttons in Zoho Books' BACS dialog differ in one thing: whether payment is recorded against the bills when the file is created.
Generate creates the BACS file but does not record payment for the selected bills. Zoho Books says you should then record those payments manually. The bills stay open until you do.
Generate and Record Payment creates the file and records payment for the bills in one step. The bills show as paid immediately, even though the money has not yet left your bank.
Neither option is wrong. Recording at generation saves a step. It suits a team that submits the file the same day and rarely sees a payment fail. Generating first and recording after the run clears keeps Zoho Books matched to what the bank actually paid. That matters if the bank rejects a payment or you hold the run back.
The choice also affects your suppliers. The vendor portal updates the paid status of a vendor bill when you record a payment, full or partial. If you record at generation, a supplier using the portal sees the bill as paid before the money reaches them. Pick one approach, write it down, and use it on every run.
What the BACS file from Zoho Books contains
The BACS file Zoho Books produces follows a fixed layout of eight record types. Knowing them helps when your bank rejects an import. Zoho Books documents them in this order:
- Volume Header Label (VOL1)
- First File Header Label (HDR1)
- Second File Header Label (HDR2)
- User Header Label (UHL1)
- Payment Instruction records, which hold the payments themselves
- Contra record
- EOF1 and EOF2 records
- User Trailer Label (UTL1)
Three details answer most questions from a bank's import screen. Amounts in the payment instruction record are given in pence, so the file shows no decimal point. The payment instruction uses transaction code 99 for Bank Giro Credit. The contra record uses code 17, which marks a debit record.
The EOF1 and EOF2 records repeat the details of HDR1 and HDR2, except that the first four positions carry the label EOF. The HDR2 record states a block length of 02000 and a record length of 00100. You rarely need to read the file by hand. When an import fails, though, your bank's support team will ask about these fields. The full field table is on the Zoho Books help page for generating a BACS file.
Worked example: a weekly supplier run in Zoho Books
This worked example follows a finance team that pays suppliers every Monday by BACS file from Zoho Books. The team records payments only once the run clears.
On Monday morning the finance manager opens Purchases > Bills. She switches to a custom view showing only bills with an expected payment date this week. She applies the vendor credits waiting against those bills, then bulk selects the list. She clicks Generate BACS File.
Zoho Books already holds the six-digit SUN from the Profile page under Settings, so no prompt appears. She checks each vendor's account number and sort code in Transaction Details. She selects the head office branch and clicks Generate, not Generate and Record Payment.
She imports the file into the company's bank account well before her bank's cut-off for the day. Because the file holds pence, a bill of £1,250.00 would appear in the payment instruction record as 125000. Before approving, she compares the total the bank shows on import with the total of the selected bills in Zoho Books.
Later in the week the payments appear on the bank statement. Only then does she record payment against each bill, dated to match the bank. The bills close, the vendor portal shows them as paid, and the bank account reconciles.
Checks to run before the first live BACS payment run
Zoho Books' part in a BACS run ends when the file is created, and your bank processes whatever the file contains. Every check on a Zoho Books BACS run therefore has to happen before you import the file. This checklist shows each check, where to make it and why it matters.
| Check | Where to check it | Why it matters |
|---|---|---|
| Service user number is correct | Profile page under Settings | The SUN identifies your organisation in the file |
| Vendor account numbers and sort codes | Transaction Details when generating | A wrong detail sends money to the wrong account |
| Bank details changed through the vendor portal | Vendor record | Portal changes synchronise into Zoho Books without finance keying them |
| Vendor credits applied | Each bill, before selection | Avoids paying more than the balance owed |
| Generate option agreed | Generate BACS File dialog | Decides whether bills show as paid before the money moves |
| Branch selected | Generate BACS File dialog, if Branches are on | Keeps branch reporting accurate |
| Import total matches the bill total | Your bank's import screen | Catches a missing or duplicated bill |
| Bank cut-off time and payment limits | Your bank | Zoho Books does not set them; your bank's rules decide when the run goes out |
At Svennis we make the first live run a single payment to an account the client controls, and we compare the bank's import screen with the bill in Zoho Books field by field before anyone sends a full supplier run. A mismatched sort code or a missing SUN shows up there while fixing it still costs nothing.
What your bank decides after Zoho Books creates the BACS file
Once Zoho Books has created the BACS file, your bank takes over. Zoho Books says you can import the generated file into your bank account to make the corresponding bill payments. From that point, your bank's rules decide when the money moves and when suppliers receive it.
Ask your bank these questions before your first run:
- How it accepts imported BACS files, and in which part of online banking.
- What cut-off time applies to an imported file on a given day.
- How many working days a run takes to reach a supplier's account.
- Whether it applies a limit to a single payment or to a whole file.
- Who in your organisation must approve the run before it is submitted.
Write the answers next to your payment run procedure. They tell you how early the file must leave Zoho Books for suppliers to be paid on the date you promised them. They also show whether a run just before a weekend or a bank holiday needs to go out earlier.
Approval inside your bank is a second control. Zoho Books builds the file from the bills you select, so the bank approval is where a second person can confirm the run. Where your team is large enough, keep the person who selects the bills separate from the person who approves the run at the bank.
Marking bills paid and reconciling after the BACS run clears
Once a BACS run clears, Zoho Books should show the same picture as your bank. Every bill in the run should be paid, and the bank account should reconcile.
If you clicked Generate, record payment against each bill now. Zoho Books lets you record a payment against a bill and view the recorded payment afterwards. Date each payment to the day the money left the bank, so the ledger and the statement agree.
If you clicked Generate and Record Payment, the payments already exist in Zoho Books. Your task is to confirm that each one matches a line on the bank statement. If the bank rejected or held a payment, correct the recorded payment in Zoho Books before the period closes.
A bank feed makes the matching quicker. Our guide to UK bank feeds and reconciliation in Zoho Books sets out a weekly check that fits a weekly supplier run.
High-volume teams should also watch their plan limit, because bills and expenses count against it together. Zoho Books allows 10,000 expenses and bills combined on Professional and 25,000 on Premium. Elite and Ultimate both allow 100,000.
Next steps for your first BACS run from Zoho Books
Your first BACS run from Zoho Books goes smoothly when you prepare it in this order:
- Confirm your six-digit SUN and enter it on the Profile page under Settings.
- Ask your bank for its Bacs cut-off time and payment limits, and how it accepts imported files.
- Check bank details for the vendors you pay most often.
- Decide who reviews bank detail changes that arrive through the vendor portal.
- Agree whether your team uses Generate or Generate and Record Payment, and write the choice into your month-end notes.
- Run a single test payment and compare the bank's import screen with the bill.
- Connect a bank feed so the cleared run reconciles without manual matching.
Once the first run has cleared and reconciled, repeat the same checks on the next two or three runs before you treat the process as routine. Most problems appear early, when a vendor record is first used.
If you want a second pair of eyes on the setup, our page on Zoho Books partner services explains what support looks like after the first build. To find out who we are and how to reach us, see Svennis as a Zoho partner in the UK.