A BIC number (Business Identifier Code, also called a SWIFT code) is a unique code of 8 or 11 characters that identifies a bank anywhere in the world. On an international payment the BIC makes sure your money reaches the right bank, alongside the IBAN. In this article you can read what a BIC number is, how it is built up, when you still need one and what to check before you use it.
Table of contents
What is a BIC number?
A BIC is a Business Identifier Code, known colloquially as a SWIFT code. It is a unique code that identifies financial institutions worldwide, laid down in the international standard ISO 9362. Swift acts as the registration authority appointed by ISO, which is why the two names are used interchangeably in practice. You can find the standard explained on Swift’s own page about the Business Identifier Code. The BIC works together with the IBAN: one identifies the bank, the other the account.
How a BIC number is built up
The eight-character code has three parts, and an optional fourth:
- Party prefix, 4 characters: identifies the institution itself.
- Country code, 2 letters: the country, following the ISO 3166-1 standard.
- Party suffix, 2 characters: in older descriptions you will see this called the location code.
- Branch code, 3 characters and optional: a specific office, department or unit. Where you see XXX, it refers to the primary office, and an eight-character code without a branch code means the same thing.
How does a BIC number work?
A BIC works as a kind of postal address for banks, so an international transaction can be processed quickly and accurately. Its main functions are:
- identifying the bank the money has to go to;
- routing the payment through the network;
- identifying the parties in the messages banks exchange.
One nuance that is easy to miss: having a BIC does not mean an organisation is connected to the Swift network. There are connected BICs, which can exchange messages, and non-connected BICs, which exist for reference purposes only. BICs are also issued to organisations that are not financial institutions at all. So treat a BIC as an identifier, not as proof that a party can receive payments over Swift.
When do you need a BIC?
Worth knowing: inside the SEPA area you have not needed a BIC for euro payments since 2016, because the IBAN is enough on its own, the so-called IBAN Only rule. That applies to a euro payment within the Single Euro Payments Area. You mainly still need a BIC for payments outside SEPA, for example to countries beyond Europe over the Swift network. In those cases you use the BIC together with the recipient’s account number or IBAN.
BIC numbers in your organisation
If you do business with international partners outside the euro area, build the BIC into your payment procedures and put it on your invoices and contracts. Make sure the people who process payments know how to use it correctly, and store it with the supplier’s master data rather than looking it up each time. Doing this consistently prevents payment errors and keeps your outgoing payments moving.
What to watch out for
A small error in the code leads to delay or a failed payment, and intermediary banks sometimes deduct a fee for repairing a payment. So verify your trading partner’s BIC before you pay, and take the code from the invoice or the contract rather than from an e-mail signature. Bear in mind that some countries and banks ask for additional information on international payments, and keep your payment software current.
The role of TriFact365
TriFact365 does not execute payments, but it does make sure the right bank details land in your administration. The software recognises data such as the IBAN and BIC on purchase invoices automatically, from domestic and foreign suppliers alike, and turns them into a booking proposal in your own portal. After your check the entry goes to your accounting package, with a clear audit trail behind it. The payment itself you make in your bank or in that package. See how processing incoming invoices works.
Frequently asked questions about the BIC number
Business Identifier Code. It is a unique code of 8 or 11 characters that identifies a bank worldwide, set out in the ISO 9362 standard and commonly called a SWIFT code.
In everyday use yes. BIC is the name of the code under ISO 9362, and Swift is the organisation that issues it as registration authority and runs the messaging network that uses it.
No. Since 2016 the IBAN alone is enough for euro payments inside the SEPA area. You mainly still need a BIC for payments outside SEPA.
The IBAN identifies the account, the BIC identifies the bank. On international payments outside SEPA you often use them together.
On your bank statement, in your online banking environment, and on invoices and contracts from the party you are paying. Take it from a document rather than from an e-mail signature.
TriFact365 recognises the supplier’s IBAN and BIC on purchase invoices automatically and puts them in the booking proposal. You make the payment itself in your bank or accounting package.
In closing
The BIC number is the worldwide identifier for banks. Inside Europe the IBAN usually gets you there on its own, but for payments outside the SEPA area the BIC is still what routes the money. Check the code carefully, keep your bank details tidy in your records, and your international payments will go through without a repair fee attached.
