Access to cash might be the most important financial factor in any merchant’s long-term operational success. Yet, many merchants don’t consider how their selection of a payment processing partner will impact that all-important liquidity. The delay between the moment a sale is made and the moment that money becomes accessible in the bank – also known as the funding period – doesn’t always seem as pressing as things like transaction fees and hardware costs, but it plays a huge roll in everything from meeting obligations to sleeping well at night. Luckily, some payment processors offer shorter funding periods than others, and merchants with the right processing partners can gain access to their hard-earned money in 12 hours or less through a feature known as next-day funding.
What Is Next-Day Funding?
Effectively, next-day funding is simply the elimination of the hold period that most payment processors place on funds derived from credit card transactions. Holds represent a way for payment processors to mitigate some of the risk involved in processing card transactions, but that risk mitigation comes at a cost – a potential strain on the processor-merchant relationship. It isn’t uncommon for hold periods to last up to three business days, making them a pretty significant annoyance for merchants. Annoying clients is generally not a good business practice, and as a result, some payment processors – like BAMS – have opted to offer hold-free, next-day funding to qualifying merchants.
With next-day funding, any batches processed before a processor’s prescribed cutoff time will be available the morning of the following business day. Transactions that come in after that deadline will be available the day after that – still quick, but not as immediate as the next-day. That makes the cutoff time involved in next-day funding an important consideration, and one merchant should specifically keep in mind since not all processors offer equally generous cutoffs.
The Importance of Next-Day Funding
Next-day funding offers some major benefits to merchants, some more obvious than others, and some more or less significant depending on the type of business an individual merchant does. But, in all cases, next-day funding is a far better option than waiting one, two, or even three full business days for transaction funds to land in the bank.
The first and probably most obvious benefit is that next-day funding improves liquidity and maximizes available cash flow. Every business owner that’s ever held their breath as payroll approached knows how important healthy cash flow is, and gaining access to next-day funding is one of the best ways to ensure those kinds of close calls don’t happen.
That’s especially true merchants that do heavy weekend business, like bars, restaurants, and other entertainment venues. Because funding works on business days, not calendar days, without next-day funding, the money from a transaction processed on a Friday night might not be available until as late as the following Wednesday! Gaining access to weekend funds on Monday morning instead of mid-week lifts a potentially major financial burden.
Next-day funding doesn’t just help with cash flow and payroll, it also makes account management faster and easier. Not only does removing the delay in funding make things simpler for in-house bookkeepers and accounting staff, it also ensures that outstanding accounts with vendors can be closed out as quickly as possible. That’s a crucial factor in maintaining healthy business relationships, not to mention that many vendors offer significant discounts for fast payments.
Finally, next-day funding provides merchants with more control over their own money. This one is less of a business-related benefit and more of an emotional one. Merchants work hard to make their sales and to play by the rules, and their hard-earned money sitting for days in a payment processor’s accounts instead of their own rubs a lot of merchants the wrong way. Next-day funding recognizes the performance of trustworthy merchants and ensures that those merchants have faster access to the money they’ve earned through good business practices. Having that money in their own bank accounts, even if only for a few extra days, just feels better – a small, but real benefit.
How BAMS Next-Day Funding Works
BAMS offers qualifying merchants next-day funding on all VISA, Mastercard, Discover, and American Express transactions processed before 9 PM. That’s one of the most generous cut-off times in the industry, and the funds from any batches processed before it will be available by 7 AM the morning of the following business day – a turnaround of less than twelve hours.
Best of all, with BAMS, there are no additional fees associated with next-day funding – something that can’t be said for all processors. The result is that BAMS merchants have not only some of the fastest expedited funding access available in the industry but also some of the cheapest.
If you’d like to find out more about next-day funding or how BAMS’ interchange-plus fee model and low-price guarantee can save you money on your merchant statements each month, get in contact with a member of the team or submit a request for your customized five-point price comparison today!