What Is Next Day Funding, and Is it Right for You?

 An ACH transfer, or bank-to-bank transfer, typically takes two to three business days to complete. For some merchants, that lag time can take a toll on the business’s cash flow, especially if it conducts a majority of its sales via credit or debit cards. Next day funding, on the other hand, allows merchants who settle batches before the evening cutoff time (typically 10 p.m. EST) to receive those funds the next business day. This service is available depending on the merchant services provider. For Fridays and Saturdays; as long as merchants settle their daily batch by the cutoff time, their funds will be deposited into their account and available for use Monday morning.

The Benefits of Next Day Funding

The most obvious benefit of next day funding is that funds are immediately available the morning after merchant customers settle their batch (unless they settle it on a Friday or Saturday evening). Next day finding can be up to two to three times faster than traditional funding, which means merchants can do more with the money they have. Often, there is no limit to batch sizes, which means no holds to double check amounts, no delays and no headache.  For software providers, there is absolutely no development work required to offer Next Day Funding – it’s a feature that is offered by the integrated payments partner.

The Drawbacks of Next Day Funding

There are two drawbacks to next day funding. The first is that it is not same day funding. Same day funding is even faster than next day. With same day funding, money is available to merchants who settle batches before the 6 a.m. cutoff. If the merchant is too tired on Thursday to reconcile their books and wants to do it early Friday morning they still have access to those funds for the weekend, business owners can hit the hay and set their alarm for bright and early and still receive their funds.

The second drawback is that next day funding is an additional feature to standard merchant services, meaning that it generally costs more. However, the additional cost is well worth it to those who need the extra cash flow for busy days.

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