Everyone loves payday — especially when it arrives early. Banks with early direct deposit offer customers the ability to get their paychecks up to two days earlier than normal.
This means more time to pay bills on time and less stress over fees. It also means having cash on hand when opportunity knocks.
Boost Your Savings
Direct deposit is a great way to get your paychecks faster and avoid the risk of losing paper checks. But what if you could get your funds even sooner? Early direct deposit is a banking feature that allows some banks to make your money available up to two days before your scheduled payday. This can be a huge convenience for many people, especially those who live paycheck to paycheck or have a limited income.
When you have access to your money a few days early, it can help ease stress about bills, prevent overdraft fees, and even allow you to save more. If you want to start saving more or pay down debt, you must set a savings goal and stick to it. Setting up recurring automatic payments to transfer into savings each month can be an easy way to do this. You can also use an app like Stash, which automatically deposits a small amount into your savings each week before it gets spent on anything else.
If you’re a member of Community Financial, you can harness the power of early direct deposit by opening up one of our checking accounts. Our Free Checking Account and Momentum Checking Account both come with early direct deposit. You can also use our mobile app, Current, to harness the power of early direct deposit and other cash flow features that make it easier to reach your financial goals.
Pay Bills on Time
Maintaining a strong balance between what comes into your business for revenue and what goes out in expenses is critical to your company’s long-term success. Sometimes, you may need to rework the payment terms with clients to improve cash flow or negotiate better contract terms with suppliers. Other tactics for improving cash flow include:
- Credit-checking new customers.
- Encouraging early payments.
- Leveraging volume discounts when possible to offset purchasing costs.
Many small business owners need to pay more attention to the money it takes to run a successful company; over time, these hidden expenses can add up. Whether it’s extra office space, an expensive employee phone plan, or the cost of maintaining a warehouse full of inventory, unexpected expenses can significantly impact cash flow.
A healthy level of cash flow requires your staff to understand how to accurately forecast your business’s financial state, which is why it’s important to involve all management team members in the process. Keeping everyone on the same page can help reduce communication errors and delays in paying bills. In some cases, it might be beneficial to extend your payment terms from 30 days (net 15) to 90 or even 120 days with vendors while being transparent about the reason for the extension.
Avoid Overdraft Fees
Profitability is important, but cash flow is the lifeblood of your business. If you need more money coming in to pay your bills, it doesn’t matter how profitable your company is; you won’t be able to stay in business for long. Luckily, there are plenty of ways to improve your cash flow.
For example, many banks offer early direct deposit for certain account types, which may allow you to receive your paycheck up to two days earlier than you would otherwise. This may help you avoid overdraft fees and other costly charges that can erode your bottom line.
Another strategy for avoiding overdraft fees is to sign up for overdraft protection with your bank. This service lets you have your ATM and debit card purchases covered by the bank, even if your checking account balance is negative. However, it would help if you weighed this option’s pros and cons before deciding whether it’s right for you.
If you’re looking for additional ways to improve your business’s cash flow, consider implementing new policies like offering discounts to customers who pay on time or speeding up processing your accounts receivable. Also, negotiate better terms with your vendors and experiment with pricing strategies to boost profit margins without making your products or services unaffordable to your audience.
Make a Plan for the Future
Managing cash flow is important whether you own a large company or start a small business. Your business should be able to convert sales into cash quickly while reducing and extending payments on payables as needed. The result is a positive cash flow, which helps ensure your business can continue operating without needing to turn to lines of credit or pricey loans to meet its financial obligations.
It’s easy to let your paycheck go right into paying bills and daily expenses, but it’s also smart to set aside a portion of each check for savings, helping you reach your goals sooner rather than later. Many banks offer early direct deposit, giving you access to your money up to two days before you typically get paid. This can help you avoid overdraft fees and save for unforeseen expenses like car repairs or birthday gifts while still having enough money to cover your everyday costs.
In addition to analyzing your income and expenses, meeting regularly with your banker to discuss your business is smart. They can advise you on managing your finances and help you determine if your current mix of banking products is optimal for your business. The more they know about your business, the better they can help you stay on track with your cash flow and achieve long-term success.