If there’s one thing every business owner knows, it’s this: time is money. Unfortunately, this can be a double-edged sword.
On one hand, the faster you make sales and scale your company, the greater your revenue potential; but, on the other, slow payment processing times can leave you feeling strapped for cash even when business is booming.
That’s because there’s often a lag between when your customer makes a purchase and when those funds are deposited into your merchant account. So, even if your sales are spiking, you might not have access to the cash you need to keep up with the pace of your growth.
Fortunately, some merchant services providers are able to provide next-day funding—which means you can get paid faster. And the more quickly you receive payment funds in your account, the faster you can reinvest in your company and scale your business.
What is a Next-Day Funding Merchant Account?
Every time you accept credit or debit card payments from customers, there’s a necessary processing period during which your money is stored in a holding account. Once the card transaction is approved, the issuing bank releases the funds and the payment shows up in your merchant account.
The problem is that it often takes three business days (or longer) for those funds to make their way into your merchant account. But there is another option: a next-day funding merchant account.
Next-day funding means they get the money the day after a customer buys something instead of several business days down the road. That means you get paid faster and can free up capital for your business.
Sounds like a win-win, doesn’t it? Let’s take a closer look at how next-day merchant account funding can help your business grow.
A Closer Look at How Next-Day Funding Works
In order to allow customers to pay with plastic, you need to partner with a merchant services provider (MSP) to process credit and debit card payments. However, not all MSPs can offer you next-day funding—which means you could find yourself waiting on payments long after the purchase is complete. That’s why one of the most important things to consider when choosing a merchant services provider is how quickly your transaction will get processed.
Exactly how much faster can you get paid with the right MSP? Opening a merchant account with next-day funding means you can get paid 3X faster than traditional ACH transfers!
While typical ACH transfers (or bank-to-bank transfers) take at least two to three business days to process (and sometimes up to five!), a next-day funding account ensures you receive your money the following day.
Here’s a quick example to illustrate the value of next-day funding merchant accounts.
Let’s say two business owners, Merchant A (we’ll call her Amanda) and Merchant B (Brandon), have each recently launched an ecommerce store. The only major difference is that Amanda is relying on old-school bank-to-bank transfers, while Brandon is working with an MSP that provides next-day funding.
For the sake of this example, let’s assume they both have a merchant account balance of $0.00 at the start of the week. Here’s how their week might play out.
- Amanda and Brandon each make $1000 in sales.
- Both of their bank accounts are empty when they close their batches at the end of the day.
- Once again, both merchants make $1000 in sales.
- At the end of the day, Amanda still has no money in their account.
- Thanks to next-day funding Brandon received a deposit of $1000 into his merchant account.
- Let’s assume sales increased today and both merchants earned $1500.
- Unfortunately, Amanda still has not received a money transfer. Her account balance is $0.
- Meanwhile, Brandon just received a deposit for Tuesday’s sales and now has $2000 in his account.
- Amanda’s store earns another $1500 in sales.
- Brandon decides to spend $500 on a marketing campaign to drive more traffic to the store—and brings in $3000-worth of sales for Thursday.
- Amanda receives a payout for Monday’s transactions (finally!), bringing her account balance to $1000.
- Brandon receives funding from their Wednesday sales, which brings his merchant account total to $3000—even after dipping into his revenue for a marketing budget.
- Amanda brings in $1500.
- Brandon earns $3000, thanks in part to another $500 marketing investment.
- Amanda receives money from Tuesday’s sales, bringing her merchant account balance up to $2000.
- Meanwhile, Brandon receives funding from Thursday’s sales, for a grand total of $6000 in his merchant account.
As you can see, next-day funding provided Brandon with a competitive edge. Even though he decided to increase his business expenses to fuel further growth, Brandon was able to close out the week with 3X more available funds than Amanda. Opening a next-day funding merchant account of your own can play a critical role in driving business growth by ensuring your funds are available as soon as you need them.
6 Ways to Grow Your Business with a Next-Day Funding Merchant Account
Still not sure if a next-day funding account is right for your business? Consider the ways that faster funding allows you to scale your business by allowing you to:
1. Maintain a positive cashflow.
You already know that accepting credit and debit card payments is vital to growing your business—but so is maintaining a healthy cash flow. When you’re shipping products or providing services that you haven’t received funding for, you’re cashflow is negative. You’re spending money on things that haven’t paid you back yet.
However, with next-day funding, you minimize the time between purchase and payment—which helps keep your business in the black. Preventing cashflow interruptions is especially important for fast-growing startups and businesses with a high volume of sales. The faster your business grows, the more important it is to maintain a positive cashflow; otherwise, you’ll struggle to keep with costs and won’t be able to maintain enough inventory to meet demand.
2. Manage bills with ease.
With next-day funding, your money is deposited in your account the following day. You’ll always know when to expect your next influx of cash and daily payouts make it easy to stay on top of your business expenses. That means you’ll never have to ask for an extension on rent or worry about whether you can process invoices on time. Even better, since you’ll have a reliable stream of revenue hitting your account each day, you can set up automated bill payments without giving them a second thought.
3. Reinvest in your business so you can scale even faster.
The faster you receive your money, the better chance they have of growing their business. From beefing up your range of merchandise to developing high-quality products to hiring top-notch talent, a next-day funding account frees up capital to reinvest in your company.
Since you’ll always have cash on hand, you can put your money to good use faster. That means you’ll always be able to meet (or exceed) customer demand—even if that means investing a bit more upfront to support hockey stick growth.
4. Protect yourself from fraud and chargebacks.
Next-day funding makes it easier to identify potentially fraudulent purchases that could go unnoticed with traditional payment processors. Longer processing times make it more difficult to get a clear picture of your payables and receivables, which can make it more challenging to keep track of incoming payments and chargebacks. However, opening a next-day funding account allows you to manage customer accounts more effectively, minimize the impact of chargebacks, and nip fraud in the bud.
5. Improve vendor relations (and avoid late fees).
Third-party vendors and suppliers likely don’t care how long it takes for payments to enter your merchant account, but they do care about getting paid on time. With a next-day funding merchant account, you have access to the money needed to pay your vendors more quickly. The more prompt you are about paying bills and invoices, the better relationship you’ll build with vendors. Plus, paying on time can actually save you money by avoiding late fees.
6. Build a happy, loyal workforce.
Happy customers are the only key to a successful business; you also need to keep your employees happy and motivated. If your employees can’t count on receiving consistent paychecks, however, there’s not much stopping them from looking for opportunities elsewhere. By opening a next-day funding merchant account, you’re not only ensuring your business gets paid on time, but also that you have the ability to attract and retain an awesome team of employees.
Get a Merchant Account that Can Keep Up with Your Business
Getting funds faster allows businesses to reinvest in themselves and grow more quickly. Whether that means spending on marketing, merchandise, vendors, payroll, or hiring new recruits, you can bring your business goal to life more quickly when you have access to your money.
Ready to grow your business faster and maximize revenue with GetPayment’s next-day funding merchant accounts?Contact our team today for your free analysis and custom merchant solution.