holding deposit /off set rent confused

confused my house now falls in the threshold for placing deposit in a scheme . read your web advice . confused .

I have 4 french students who have now gone back to France so we are dealing by emails
As they did not have cash on them, and if all ok they will start AST 1 Sept.
I advised they could send a holding deposit which I would off set against the first month rent subject to contract . while I sort out the Deposit Schemes .

Is this wrong ? and in fact has this to go into a scheme ? in which case how do both parties show comittment ? they been chasing me and a parent has sent it over .

how far in advance can rent be paid before signing contact .
our terms have been 2 month deposit Plus 1 mth rent in advance cleared by the signing of contract / moving in .