Topic 1 - Payment Methods Flashcards
What is a drawer? (Cheques)
The company/person who is writing and sending the cheque
What is a drawee? (Cheques)
The bank who is processing the cheque
What is a payee? (Cheques)
The company/person who is receiving the money
If a balance is bought forward is that the opening or closing balance?
Opening balance
If a balance is carried forward is that an opening balance or closing balance?
Closing balance
Bank statements are from the banks perspective, if there is £100 in the account, would it be a debit or a credit from the banks perspective?
Credit because from the bank perspective they owe us this £100
Bank statements are from the banks perspective, if there is -£100 in the account, would it be a debit or a credit from the banks perspective?
Debit because from the bank’s perspective we owe this money back to the bank
When you pay in cash and fill in paying in slip… what must you do?
You must count how many of each coin and note you have and fill this in on the paying in slip
What is a counter credit?
A counter credit is when you pay in money in store at the bank
What must you do to set up a direct debit?
Fill in a direct debit mandate
What is a clearing system?
A clearing system is a system set up by major banks to derail with cheques
How long does it take for a BACS payment to be received by the recipient?
A few working days, but will leave the bank immediately
What affect does a cash withdrawal have on the bank balance?
Reduces the bank balance immediately
What affect does a debit card have on the bank balance?
Reduces the bank balance immediately
What affect does a direct debit have on the bank balance?
Reduces the bank balance immediately
What affect does a standing order have on the bank balance?
Reduces the bank balance immediately
What affect does a bank draft have on the bank balance?
Reduces the bank balance immediately
What affect does a BACS/direct credit have on the bank balance?
Reduces the bank balance immediately
What affect does a faster payment (FPS) have on the bank balance?
Reduces the bank balance immediately
What affect does BACS have on the bank balance?
Reduces the bank balance immediately
What affect does CHAPS have on the bank balance?
Reduces the bank balance immediately
What does BACS stand for?
Bankers automated clearing service
What does CHAPS stand for?
Clearing house automated payment system m
What affect does a cheque have on the bank balance?
Reduces the bank balance at a later date, because it can take a few working days to clear
What affect does a credit card have on the bank balance?
Reduced the bank balance at a later date when the amount is settled
What affect does a cash withdrawal from a petty cash float or till float have on the bank balance?
No affect on the bank balance
What affect does a dishonoured cheque have on the bank balance?
No affect in the bank balance because the cheque will have been refused either due to incorrect details or insufficient funds
What affect does a cash deposit have on the bank balance?
Affect the bank balance at a later date
What is an electronic payment?
The transfers between bank accounts
What is a paying in slip?
A small piece of paper which is kept by us when depositing cash or cheques into the bank for our reference
How long is a cheque valid for?
6 months
Can cheques be post-dated? (Dated after the actual date the cheque was written)
Yes, but it can’t be cashed sooner than the date on the cheque
What is the paying in sub/counterfoil?
A small piece of paper which is kept for our own records and our references from paying in a cheque
Does a cheque have to be written in words and figures?
Yes, to avoid manipulation
On the bank statements how will a cheque appear?
With their unique reference number which will match what is on the sub/counterfoil
What is a standing order?
A regular payment of the same amount that’s paid on a specified date
What is a direct debit?
Is a regular payment of a amount which can vary but is paid on a specified date
What is a dishonoured cheque?
A cheque which has been refused by the bank usually for incorrect details or insufficient funds
What is a bank draft?
A guaranteed form of cheque which is drawn by the bank and usually incurs a fee.
Also usually used for overseas
What payment method would you use for overseas?
Bank draft
What is CHAPS?
A guaranteed same day payment method, often used for high value purchases, like property/land
It can’t be cancelled and there is no minimum or maximum charge
What payment method would you use for acquiring land/property?
CHAPS
What is BACS?
Online payment for the variable regular payments to multiple payees
Can take 3 working days to process
Usually used for wages
What payment method would you use for wages?
BACS
What is a faster payment (FPS)?
A same day payment which isn’t guaranteed and is usually used for small to medium sized payments
What does FPS stand for?
Faster payments
What payment method would you use for a online purchase?
Debit card
What payment method would you use for topping up petty cash?
Cash
What payment method would you use for regular insurance?
Standing order
What payment method would you use for phone bill with variable cost?
Direct debit
What payment method would you use for a regular fixed amount cost?
Standing order
What payment method would you use for a same day guaranteed payment?
CHAPS
What payment method can you not cancel?
CHAPS
What payment method can you not cancel?
CHAPS
What payment method would you use for high value purchases?
CHAPS
What payment method is guaranteed form of cheque?
Bank draft
What payment method would you use for small to medium sized payments?
FPS/Faster payments
What payment method would you use for settling an invoice?
BACS
How long does it take for FPS/faster payment to clear?
Usually a few hours
