Next Day Funding Can Help Your Business Grow
When your customers make card purchases, for one reason or another, the money from those credit card transactions often doesn’t hit your bank account for two, or even three business days. In some cases, those delays — known as standard holds — are for fraud protection and risk mitigation reasons, and in some cases it just takes time for the wheels of the payment processing machine to turn. But, regardless of why holds happen, one thing that is almost universal is that merchants hate them. After all, who wants to wait to get their money?
Next day funding is a feature offered by some payment processors that rewards merchants with a strong history of good business practices by eliminating those standard holds and instead making transaction funds available as soon as the very next morning. For instance, if a processor offers next day funding with a 7 PM cutoff time, any transactions a merchant batches by that time will be in their bank account the following business day.
Two or three days might not seem like a long time to wait, but in some cases, having to wait three business days to access funds from sales can be excruciating — especially for merchants in entertainment sectors that do heavy weekend sales.
The following are three tips you can use to access and get the most of next day funding programs offered by your payment processing partners in order to maximize both the health of your financials and your company’s ability to grow.
Tip: Ask About Next Day Funding Even if You’re Not Sure It’s Available
First and foremost, it should be noted that not all merchant services providers offer next day funding, and not all merchants are eligible for it when it is available. Ask anyway! In the best-case scenario, you’ll be granted access and have your money much faster. In the worst-case scenario, you’ll be told no, and then you can find out why. If next day funding just isn’t available, getting to yes may be as simple as switching to a new merchant services partner that offers it. If you’re not eligible, find out when you will be and then compare that to quotes from your competitors. There is no reason to be stuck with a merchant services provider that simply doesn’t do next day funding or won’t give it to you with reasonable business history, but unless you ask, you may be dealing with frustrating holds for no reason!
Tip: Use Next Day Funding to Better Manage Your Inventory
If you’re a retailer, you know how important good inventory management is to your success. The behemoths you compete with have high-powered just-in-time inventory systems to minimize the financial burden of sitting on excess product, but you don’t. Yet, without keeping sufficient inventory on hand, you face the risk of getting caught understocked or, worse, not having enough cash on hand to order when you need to. As a result, many retailers overstock on inventory when times are good in order to get them through potentially leaner times ahead. Getting access to next day funding can help your inventory management efforts because faster, more consistent access to the cash from your sales means you can actually decrease the amount of inventory you carry at any given time and increase the frequency of your orders (assuming your suppliers can handle that) without ever having to worry that you’ll be caught short on cash at the worst time possible. Your expense management will be better, your storage more efficient, and, most importantly, your peace of mind improved.
Tip: Improve Your Ability to Seize Opportunities
Because next day funding ensures healthier and more consistent cash flow, it helps reduce the need to pile away money for emergencies, and lets you put more of your revenue to work building and growing your business. Having a healthy emergency fund is always a top priority, and the pandemic showed us all what can happen when businesses aren’t prepared, but next day funding can allow you to dial back slightly on saving for rainy days in order to take advantage of things like more immediate growth opportunities, testing new products or services, investing in new technology to improve omnichannel sales, and more. However, it’s worth noting that next day funding doesn’t eliminate cash flow concerns, and any time you make changes to your company’s financial plans, it’s always a good idea to consult with a trusted professional.
The many benefits that next day funding can offer your business mean it’s an important factor to consider when choosing a payment processing partner, and may be a good reason to make a switch if your current partner requires long, painful holds on your funds.
BAMS offers a next day funding program with a 9 PM cut-off time that sees funds from batched transactions hit our merchants’ bank accounts by 7 AM the following business day — as little as ten hours later. To find out more about how BAMS next day funding can help your business shore up your cash flow and open up new opportunities, click here to get in contact with a member of the team today.
