Deciding Whether You Need Next-Day Funding

President at BAMS & CRMDialer. Overseeing the growth of payment gateways, e-commerce growth hacks and SMB efficiency improvements.

Running a business in 2021 has its own set of challenges. Regardless of what type of industry you’re in and what you sell, you’re going to run into similar issues: lack of good employees, lack of materials and last but not least, lack of funding.

The good news is, one of those things can potentially be solved quite easily. Depending on your circumstances, next-day funding might be the thing you need to free up some cash more quickly and help your business run more efficiently. Based on my experience running a business that offers this service, I hope this article can give you a better understanding of next-day funding, highlight both the positives and negatives of this service and give you a guide to figure out if you need it.

Defining Next-Day Funding

In the world of bank transfers (or ACH transfers), it usually takes a few days for the money to go from one account to the other. Depending on who is on either end, this could take from three days to a week. And when you have a business to run and you depend heavily on cash flow, that can be just too much time to wait.

Next-day funding allows you to have your money in your bank account precisely in the time frame it implies: the next day. Usually, as long as the money is sent before 10 p.m., it will be there the next morning.

Not all merchant services providers offer this feature, but it might be worth looking into it if you need to have readily available funds as soon as possible. However, this payment option comes with its own set of pros and cons.

The Pros Of Next-Day Funding

The most obvious advantage of using this payment method is that you’ll get funds fairly quickly. Even if money is sent your way on a Friday, it can land in your account as early as Monday morning. There are no manual checks to complete and practically no limits in terms of the amounts or the number of payments that someone can send your way.

Additionally, it doesn’t take any extra work to set up on your website compared to a traditional payment method. Merchant service providers that have this feature offer it out of the gate, so all you have to do is connect it with your existing systems as you would any other merchant service provider.

The Cons Of Next-Day Funding

The first downside is that many merchant service providers offer this feature out of the box but have an extra charge for it. If you need your funds urgently, you’ll be forced to spend extra money per transaction. However, as more providers start offering this service, it is slowly becoming more affordable for businesses of different sizes.

The second downside is that next-day funding is not same-day funding. If you need your funds immediately, you can opt for a merchant services provider with same-day funding. While this will get your money in your account sooner, it will also incur additional charges. Moreover, providers with same-day funding are not as common yet.

Deciding Whether You Need Next-Day Funding

If your business heavily depends on a regular cash flow to keep it running, this is an option that can help make your cash reserves more stable. An example of a business that may need next-day funding is a convenience store. It’s often useful for establishments like this to be able to have cash on hand in order to pay suppliers, contractors and drivers.

Especially if you have a lot of credit card transactions during the weekend, next-day funding can really come in handy. With standard payments taking days to clear, your weekend credit card payments may come in as late as a Wednesday morning.

All in all, depending on your circumstances, next-day funding can be an excellent tool to cut down the time it takes to get paid and help you improve the way you run your business.

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