Slick credit card salespeople approach your business all the time, and they’re always full of promises. From the lowest rates you’ve ever seen to countless incentives and perks, it can be tough to see through the sales rhetoric and find the truth. One common bonus that credit card processors use to earn your business is the promise of next day funding. It sounds great – make a sale today and get your money tomorrow – but it’s not without tradeoffs. Here’s how to decide if next day funding is really for you.
Is It Really Next Day Funding?
Some processors will say they offer next day funding, but that’s not really what they mean. (By the way, a processor who doesn’t say exactly what they mean is a major red flag!) True next day funding means that an ACH deposit is actually made on the same day that you process the transaction, not just that the transaction will show up in your bank account in the pending stage. Read the fine print on any next day funding programs you are considering very carefully to ensure you’re really getting what you want.
Can You Handle Delays Sometimes?
Credit card processers and banks aren’t perfect. Sometimes things happen, and your funding will take an extra day. While this shouldn’t happen all that often, it’s important to remember why banks usually take several days to approve funds, the most important reason being fraud mitigation. You may want your money ASAP, but the bank still has to do its due diligence to protect you and itself from fraud. If a batch looks suspicious, they’re going to take a little extra time to make sure it’s legitimate – even if it costs you your next day funding. If occasional funding delays are absolutely unacceptable to you, you are probably not a good candidate for next day funding.
What’s the Cutoff Time?
Remember that in order for funding to truly hit your bank account the next day, a deposit has to be made later the same day. This usually translates into earlier batch cutoff times. This means that although your business may be open and making credit card transactions till 9pm, only sales up until 5pm (for example) will count for next day funding. The exact time varies by processor, so make sure you know what’s being offered and shop around for a processor that meets your needs. Remember, too, that it’s not always best to go with the absolute latest cutoff available. There may be other reasons why that processor is not the right choice for you (poor customer service, long and restrictive contract, etc.), plus do you really trust that a processor who permits a 9pm cutoff is giving the bank enough time to check thoroughly for fraud?
Why Do You Need Next Day Funding in the First Place?
It’s time for a little tough love. If you’re depending on next day funding to keep your business afloat, it’s probably time to step back and consider why you’re running your company so close to the margins. Even in the very early stages, it doesn’t make good business sense to rely on one day’s sales to power the next. Consider a small business loan or another type of funding to give yourself some breathing room, and review your budget to see if there are places you can cut costs. Make sure next day funding is just a “nice to have” instead of a “need to have.”
Find a Credit Card Processor Who Won’t Steer You Wrong
Next day funding isn’t the right choice for every business, and not all next day funding is created equal. The key to understanding all your options is to find a credit card processor that you trust to help you navigate them. That’s why we want to encourage you to give 360 Payments a try. We offer a variety of funding options, including several next day options with varying cutoff times. We’d love to talk with you. Give us a call at 1-855-360-0360 or drop us a line on our website. We’ll explain everything and help you pick a funding option that’s right for your business.
PS – Never ever lease your credit card terminal! Here’s why.
PPS – Here’s how to avoid forced transaction scams.