Making, receiving and recording payments made to or from a business

Welsh translation of above

Learning Objecives

Understand the purpose of different methods of payments

Complete financial records to record incoming and outgoing cash

Be able to record payments made and received

Be able to analyse payments made and received, allowing for VAT

Methods of Payment

Cash Cheque Debit Cards Credit Card BACS

Which Methods are the most popular?

A) CashB) ChequeC) Debit CardsD) Credit CardE) BACS

CashChequeBACS

Credit CardsDebit Cards

ChequesWhat’s on a cheque?

Usually takes 3 working days for a cheque to clear Is a paper based form of payment “promise to pay” Cheques must be presented to a bank to obtain

payment

Debit Cards

A plastic card, issued by the bank which allows payments to be made without writing a cheque or carrying cash.

Customer hands over debit cart

Seller puts card in chip and pin machine

The bank electronically takes from customer account and adds to business account (3 days)

Credit Cards

Just like a Debit Card

BUT

You are borrowing the money (it does not come out of your account)

You get a statement at the end of each month

You have to pay some off each month You have to pay interest on the balance

BACS Banks Automated Clearing System

Credit Transfers Used for large transfers on money, usually

wages Direct Debits

The business can request payment for different amounts e.g. utility bills

Standing Orders Customer instructs bank to make regular

payments to business

It is a way of transferring money between accounts without exchanging cash or cards

The main advantage of using cash for payments

A) Ideal for small purchasesB) Better for large amountsC) Can be used for mail order or

onlineD) Customers don’t have to

remember payment datesE) Enables the cardholder to borrow

money A) Ideal for small purchases

The main advantage of using cheques for payments

A) Ideal for small purchasesB) Better for large amountsC) Can be used for mail order or

onlineD) Customers don’t have to

remember payment datesE) Enables the cardholder to borrow

moneyBetter for large amounts

The main advantage of BACS for payments

A) Ideal for small purchasesB) Better for large amountsC) Can be used for mail order or

onlineD) Customers don’t have to

remember payment datesE) Enables the cardholder to borrow

moneyCustomers don’t have to remember

payment dates

The main advantage of Debit Cards for payments

A) Ideal for small purchasesB) Better for large amountsC) Can be used for mail order or

onlineD) Customers don’t have to

remember payment datesE) Enables the cardholder to borrow

moneyA) Can be used for mail order or online

The main advantage of Credit Cards for payments

A) Ideal for small purchasesB) Better for large amountsC) Can be used for mail order or

onlineD) Customers don’t have to

remember payment datesE) Enables the cardholder to borrow

money Enables the cardholder to

borrow money

What is the main disadvantage of using Credit cards?

A) has to be countedB) Takes time to clearC) High interests so expensive way to

borrowD) Customers may fail to check price

changes and fail to budget.E) Danger of fraud

High interests so expensive way to borrow

What is the main disadvantage of using Cash?

A) has to be countedB) Takes time to clearC) High interests so expensive way to

borrowD) Customers may fail to check price

changes and fail to budget.E) Danger of fraud

It has to be counted

What is the main disadvantage of using Cheques?

A) has to be countedB) Takes time to clearC) High interests so expensive way to

borrowD) Customers may fail to check price

changes and fail to budget.E) Danger of fraud

Takes time to clear

What is the main disadvantage of using Debit Cards?

A) has to be countedB) Takes time to clearC) High interests so expensive way to

borrowD) Customers may fail to check price

changes and fail to budget.E) Danger of fraud

There is a danger of fraud

What is the main disadvantage of using BACS?

A) has to be countedB) Takes time to clearC) High interests so expensive way to

borrowD) Customers may fail to check price

changes and fail to budget.E) Danger of fraud

Customers may fail to check price changes and fail to budget

Cash why use it why not use it?

Payment is made immediately

Ideal for small purchases

Convenient

Cash has to be counted

Has to be locked away for security

Can be stolen

Chequeswhy use them why not use them?

Safer than cash Better for large

amounts

Takes time to clear It can bounce Errors can result in

completion and non payment by bank

Debit Cardswhy use them why not use them?

Guaranteed payment

Can be used for mail order or online

Takes 3 days for money to be received

A fee must be paid to the bank

Danger of fraud – hence chip and pin

Credit Cardswhy use them why not use them?

Guaranteed payment

Can be used for mail order or online

Enables the cardholder to borrow money

Takes 3 days for money to be received

A fee must be paid to the bank

High interests so expensive way to borrow

Credit Transferswhy use them why not use them?

Fewer security problems – no cash

Records kept through bank statements

Quicker than writing lots of cheques

The bank needs notice before releasing wages

They need checking as errors cost money

Direct Debitwhy use them why not use them?

Guaranteed payment

Customers don’t have to remember payment dates

Businesses can change amount and payment date

Money is still taken even if there is no money in customers account

Customers may fail to check price changes and fail to budget.

Standing Orderswhy use them why not use them?

Customers don’t have to remember payment dates

Customers don’t have to write out cheques

Money is still taken even if there is no money in customers account

Customers may fail stop standing order and go on paying for services they are not receiving.

Cash Books – Payments made by business