Next Day Funding
The concept of the next day funding is a relatively new concept that originated with the introduction of electronic money several years ago. Traditionally, funds from bank and credit card payments are held up from one to three days in advance of being available for usage to the consumer. This is where the next day funding enters into the picture. Next day funding provides retailers with funds from credit cards transactions within an entire business day. Merchants usually receive the funds they need from their respective banking institutions within one business day. The funds remain in their accounts until the specified deadline. Shoppers can make purchases with their credit cards even if they do not have the funds in their account yet. The funds are available and can be used immediately without any delays whatsoever. This eliminates the need for consumers to apply for additional funds from their bank, which could take days or weeks.
advantages of next day funding
With next day funding, consumers get quick access to their funds. Merchants can use these funds for replenishment of inventory and for other operational expenses such as payroll, data processing and marketing. This eliminates the need for consumers to carry large amounts of cash on hand. As a result, customers enjoy faster access to their cash flow. Another advantage of next day funding is the elimination of overnight processing fees. Overnight processing fees are charged by most credit card processors when they receive a deposit from a customer’s checking account. These fees are usually charged at the very end of the billing cycle. In some cases, processors require users to sign a new account authorization form just to process the next day’s deposit. For businesses, eliminating these fees means more profit.
Many processors also charge late payment fees to customers who pay their bills after the due date. For small businesses, this charge significantly reduces cash flow. Eliminating this fee significantly improves cash flow and allows merchants to pass on higher payments to their customers. Smaller merchant groups also benefit from next-day funding, allowing them to make larger purchases or take out larger loans with fast approval. Most credit card processors offer next-day funding to customers who maintain regular balance payments. The interest rates are often less than what small business owners experience when they accept credit cards for purchases. For companies that do not accept all major credit cards, next-day funding is an excellent alternative. Businesses that operate on cash flow issues will definitely benefit from next-day funding.