Next Day Funding – What It Is and What It Means for Your Business

Running a successful business is hard work, so it’s understandable that merchants want to enjoy the fruits of their labor as quickly as possible. But standard practices in the payment industry often require merchants to wait days – in some cases almost an entire week – to gain access to their money. That delay has the potential to be hugely damaging, especially during tight times and uncertain economic circumstances like those we’re currently navigating in the wake of a worldwide pandemic. Luckily, not all merchant accounts are created equal, and some payment processors offer merchants a respite from long hold periods in the form of next day funding.  

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How Next Day Funding Works

Traditionally, funds from credit card and ACH payments are held anywhere from one to three business days prior to being released to the merchant for use. The primary reason for funds to be held is risk mitigation, but, while keeping funds back for two or three days might help with minimizing risk due to fraud, the negative impacts hold have on merchants can, in many cases, outweigh the potential benefits to the payment ecosystem. 

That’s where next day funding comes into play. Next day funding provides merchants with funds from credit card transactions within a single business day. The payment processor sets a cutoff time, and any transactions processed prior to that time will be available the next business day, while any that come in after will be available one day later  Because that quicker release negates some of the risk mitigation benefits, next day funding services often come with a slight bump in fees, but the result is that merchants can access their money sooner, rather than having it sit in a payment processor’s bank account instead. 

Why Next Day Funding is So Important for Your Business

First and foremost, if you’re a merchant currently seeing two or three day holds, you’re losing access to your money. Even if the hold period is an inconvenience at worst, it’s still a period in which you can’t access or use money that your business has earned. 

But for many businesses, access to funds is more than a mere inconvenience. Access to funding from credit card transactions is a cash flow issue, and maximizing cash flow is something all businesses should look to do at essentially all times. Cash flow is the lifeblood of business, and a business with healthy cash reserves is at a far lower risk of financial distress than one with restricted liquidity. When it comes to cash flow generated from credit card transactions, some businesses are more susceptible to damage from holds than others. Merchants with high levels of weekend credit card sales, for instance, could potentially have no access to funds from transactions processed on a busy Friday night until as late as the following Wednesday! That could have potentially huge consequences, especially if margins are thin or payroll or other major expenses are due. 

How BAMS Next Day Funding Can Help You Access Your Funds Faster

BAMS offers our merchants next day funding that could see the money from credit card transactions available in as little as twelve hours. Because we offer a generous cutoff time of 9 pm, any transaction batched by that time will be available in your account by 7 am the next business day. We offer next-day funding on transactions processed with Visa, Mastercard, Discover, and American Express, and best of all, at BAMS, we offer that rapid next day funding at zero extra charges. That means, as a BAMS merchant, you’ll always have the quickest possible access to your funds, and it’ll never cost you an extra penny. 

BAMS not only offers next day funding, but we also offer our merchants guaranteed low transaction fees. So, not only will you get access to your funds faster, but you’ll also keep more of your hard-earned revenues. To find out more about how your business can benefit from faster access to your money at no extra charge, get in contact with a member of our team or get started with your free five-point price comparison.