Let Us Help You Get Paid
BY: Sam Huntington
In the Treasury Management area, we frequently get requests for help receiving payments. With automated clearing house (ACH), wire transfers, checks, credit card acceptance, and the old standby of cash, there are a lot of options to consider.
Ensuring you receive payments reliably and on time is important for efficient cash management. Here are some common payment questions from businesses and how we answer them.
Q. I have a new out-of-state customer and I don’t want to ship product without making sure the funds we are getting are good. They are offering to overnight a check to me. Is there a better way?
A. Checks are still a very common payment form, but let’s remember that they are still only a promise to pay if certain conditions are met. Some of these conditions are out of your control and may not be known for a day or two, or longer.
If you want guaranteed funds, your best bet is asking the other party to wire them to you. If your bank confirms the receipt of a wire transfer sent to you, that payment can’t be reversed. Exceptions to this rule are theoretically possible, but the Federal Reserve’s wire service guarantees that the receiving bank has no credit risk when they receive a wire, so most banks treat wire proceeds as they would a cash deposit and make the funds available without delay or recourse. This guarantee makes wire transfers the payment of choice for transactions that are not easily unwound, such as real estate closings.
Q. What’s the best way to receive regular payments from tenants or customers?
A. ACH payments are very inexpensive and extremely reliable. The ACH network handles over $60 trillion in payments every year. Once approved for ACH origination, you can easily send orders to make payments (such as direct deposit for payroll) and take funds from your trading partners for money you are owed. ACH payments cost less than checks and eliminate bottlenecks such as mail time and asking someone to write out a check. We can help you get authorization from your clients to take payments and you can handle the invoicing and confirmation by secure email, eliminating the postal service from the transaction. Although there are a growing number of same-day transactions, most ACH payments are settled in a different business day than they are originated, so typically you submit a payment file a day or two before you need the funds.
Q. Isn’t cash still the best way to safely receive payment?
A. While coins and currency will certainly exist in some form for a long time, the use of cash has dramatically declined since the onset of Covid last year. Your cash is no good at Lambeau Field or at Badger football games. And while cash is great as long you know how to spot counterfeit currency, you’re creating your own security issues by handling large amounts of it.
We can look to other countries that have largely eliminated cash from everyday transactions by relying upon QR codes and mobile phone apps to have their customers pay quicker than fishing through a purse or wallet for cash ever was. Credit card acceptance has grown more commonplace, and we’re seeing credit card payments expanded to businesses we never thought would accept credit cards, such as CPA firms, churches, and vending machines.
We would welcome the opportunity to work with you to determine the payment type that best meets your needs and situation. Please contact me at (608) 826-3516 to discuss your specific payment situation.