Mail & the butterfly effect

[HCHTech]

My shop is in my home. A couple of years ago, the post office re-jiggered the mail delivery routes, and we went from getting our daily mail in the morning, to getting it around mid to late afternoon. Almost all of my business customers pay by check, so I'm pretty interested in the mail each day -

Anyway, I am surprised at the effect this small change has had on my business cash flow. We still get mail once per day, 6 days a week, so you would think it would all be the same, right?

Observation #1: Most businesses tend to pay their bills on Thursdays. I guess this might be so that there is the longest time between when checks are written and when the money is taken from the account, but maybe they are not that detailed, I don't know. Anyway, as a vendor, it seems I get most of my checks on Fridays. Just sayin'

Observation #2: Banks have a "deposit deadline" - in my case it's 2:00pm. If you make your deposit by 2:00pm, then (assuming it's a local check) that deposit should be "available" to you by the next day. If you make your deposit later than 2:00pm, then it not considered as received until the next day, and you don't have it available until the day after that. All of this assumes the check is from a local business. Out of state checks always take longer to clear, and "big" checks also are held for a much longer time with availability trickled out in portions. It might be 5 days before you get full use of a $10,000 deposit, for example.

Observation #3: When I got mail delivered in the morning, we almost always made the deposit the same day before the deposit deadline. So a check I got on Monday was deposited on Monday and available to me on Tuesday. This is a 1-day wait for the funds. Similarly, Tuesday, Wednesday and Thursday checks also had a 1-day wait for the funds. Checks I got on Friday and deposited on Friday weren't available until Monday, so that is a 3-day wait. Checks I got on Saturday were deposited on Monday and available on Tuesday for a 3 day wait. The average of the wait time for availability in this scenario is 1.67 days (4x1 + 3 + 3 / 6).

Observation #4: Now that I get my mail delivered in the afternoon, I can never desposit it the same day. Even if we get to the bank by 5, it is considered deposited the next day. This means I wait longer for availability of the funds. Checks I get on Monday get deposited on Tuesday and are available on Wednesday for a 2-day wait. Tuesday and Wednesday checks also have a 2-day wait. Checks I get on Thursday are deposited on Friday and available on Monday, for a 4-day wait. Friday checks are available Tuesday for a 4-day wait and Saturday checks are available on Tuesday for a 3-day wait. The average of the wait time for availability in this scenario is 2.83 days (2x3 + 4x2 + 3 / 6).

In other words, the post office's route change which caused me to get mail delivered 5 hours later has added an additional 1.17 (2.83 - 1.67) days to the availability of almost every single dollar my business receives. And, it's really longer than that because I get a disproportionate number of checks on Friday - the day with the longest availability wait. No wonder I'm cranky!

 

[mraikes]

Maybe it's time to get a PO box. They're usually stuffed in the morning. And a bank with online deposits. I use USAA and get immediate availability of my deposits 7 days a week. Granted, I'm not depositing $10,000 checks, but still.

 

[HCHTech]

There is a ton of inertia with my address, so I'm not keen to change to a PO box - I think I'll have to put up with it. It's certainly possible, but I would dread it. Plus, then someone would have to drive to the post office every day in addition to driving to the bank. I could use online deposits with my bank by using their app to take a picture of the check - I'll have to look into that and how it might affect availability of funds. We took in 175 or so checks last month, so that's a lot of pictures. I wonder how much time that adds to the process. I know I declined the desktop scanner for deposits because they wanted to charge me $50/mo for it - value of time and all that - ugh. Mostly, I just want it to work the way it used to, but that's not really one of the possible outcomes here.

I have 5 accounts for my business and it literally took 6 months before everything was working right again when I changed banks a few years ago - another experience I'm not keen to repeat.

Also, it looks like USAA has the same basic policy as most other banks. I found this, which on page 19 basically says the same thing as my bank - next business day for most checks deposited. Maybe you have a special deal?

 

[phaZed]

BB&T counts any check deposited on a calendar day to be that day, not the next.

For their Mobile Check Deposit (An App for that) it is next day for me, however their terms say:

9. Availability of Funds. You agree that items transmitted using the Services are not subject to the funds availability requirements of Federal Reserve Board Regulation CC. In general, if an image of an item you transmit through the Service is received and accepted before 8:00 pm Eastern Time on a business day that we are open, we consider that day to be the day of your deposit. Otherwise, we will consider that the deposit was made on the next business day we are open. Funds deposited using the Services will generally be made available no later than three business days from the day of deposit. BB&T, in its sole discretion, may make such funds available sooner or may extend the hold period beyond three business days based on such factors as credit worthiness, the length and extent of your relationship with us, transaction and experience information, and such other factors as BB&T, in its sole discretion, deems relevant.

According to https://www.mybanktracker.com/news/fund-availability-policy-comparison-top-10-us-banks
Which shows many banks and their check clearing habits, BBT will give up to $200 by next day - however, I routinely have the full amount by the next day. I have been with them for a while, never give them problems, have good credit, etc.. so I imagine that they may extend that courtesy to me/customers for being an established customer.

OP, what bank are you with (If you are comfortable with disclosing that)?

 

[Kitten Kong]

Count yourself lucky re your cheque clearing times @HCHTech
I bank with Santander Business banking.

These are our chq clearing times.

Cheques – current accounts only

If you pay in a cheque over the counter at the Post office®, the money will normally be available on the sixth working day after it is paid in. The timescales in the table below are for cheques paid in over the counter at the Post Office® and show when we aim to make funds available to you.

Paid in at Post Office Day cheque processed Interest paid from Funds available
Monday Tuesday Thursday Monday
Tuesday Wednesday Friday Tuesday
Wednesday Thursday Saturday Wednesday
Thursday Friday Tuesday Thursday
Friday Monday Wednesday Friday
Saturday Monday Wednesday Friday

Our cut off for monies being paid into the bank (chq's) is 15.30. Otherwise it is entered the following day as above, which has a greater knock on effect. Now when you pay out a chq, as soon as it is banked, the money is debited from my account. So where is all the interest going in the meantime?

I stopped allowing cheques to be paid because of the above. I have a couple of businesses who still pay by chq (dark ages, don't / won't do BACS payments). But for the remainder, its all cash / debit or BACS direct into my account.

We used to have 2 x daily royal mail deliveries many many years ago. Now we are down to one. We used to have a company called TNT who wanted to rival RM for mail deliveries. I loved TNT mail with a passion. All their mail was delivered by 1000 at the latest.

Now our mail delivery can be anytime from 0800-1500, which doesnt give us much wriggle room if your waiting on a chq to come in, in order to get it banked same day.

Now there is talk going on, that cheques will be banked and cleared within 24 hours, and money available to be used within those 24 hours. If/when that will happen is anyones guess. But it won't start me from accepting them again.

 

[phaZed]

Ouch, Nige! That's a heck of a wait..

 

[Kitten Kong]

Ouch, Nige! That's a heck of a wait..

Your telling me Aaron. All the banks are roughly the same here..

 

[GTP]

I very rarely get cheques now.
All my regular clients do an EFT transfer at their leisure, within 7 days.
Most pay the same day they pick up their computer, or immediately after I email an invoice. I try to do invoices the same day as the job but sometimes get too busy and do it the next day.
New clients pay cash before they leave with their computer!
In home repairs for new clients are paid by cash or EFT while I'm there in their home.
Businesses are on a 30 day payment schedule, but I do charge extra 1.9% for this "privelage!"
Getting everyone onto EFT was the best way to go as the money is immediately available from the bank. It also eliminates "over the counter" transaction fees, not to mention time to drive to the bank, wait in line for a teller and drive home again.
Also, cash and EFT doesn't "bounce!"

 

[occsean]

I use my business banks app to snap a picture. I probably do 50-75 checks a month. Usually let them sit on my desk until I collect 5-10 of them and at the end of the day pull out my iPhone and spend 10 minutes depositing checks. I get the first $225 of any amount of deposits available to me instantly with the rest normally available next day. I honestly don't know when the cut off for my bank is, but it has to be fairly late like 6 ish or something because I never deposit during the day and I know I have had next day funds. FWIW I am in Oregon, use US Bank and have a 10 year relationship with my bank

 

[fencepost]

@HCHTech I'd expect this to vary hugely by bank.

Our business banking is with TCF (meh, not my call). They used to do the 2PM bit though if I was running tight on time I could call the branch and often the manager would hold that 15-20 minutes for me, but I believe at either the beginning of March or the beginning of April they changed that to (I think) closing time which varies from 5-7PM depending on branch. They also have "next day availability" deposit slips, but you have to ask the manager on duty for those and they have to OK it. That's never been a problem, because we've been with them for 15+ years and it's all business checks. Not sure what the cap on that is, we rarely have individual day deposits over $10K.

On the personal side, I do my own banking with a credit union. They make the full amount of any check I deposit up to $5000 available immediately if I deposit in-person with a teller, or $500 immediately plus a few days check hold if I use an ATM or another credit union (most have "shared branch services"). I don't recall whether that's different for their ATMs vs the credit union right down the street from me, I rarely drive to them unless I'm using a teller. It's been a few years since I did the night depository, but I think that was processed the next day as if I was at the teller so up to $5k available immediately. I can also call their Member Service line if needed and get a check hold for an ATM deposit lifted, but that may have something to do with opening the account in 1987.

 

[cypress]

I bank with Chase. I been with them since 2005 since before when it was Washington Mutual down here in Florida and everything became Chase around 2009 or so.

I have both personal and business with Chase. There is one within a 3 mile radius in my site. Lately I been doing a lot more deposits by Chase mobile app instead of doing the drive up ATM. Cut off time is 8pm so usually next business day is it available.

 

[HCHTech]

I use a regional bank here - Dollar Bank. I don't have many complaints other than the pain when I switched TO them a few years ago, and that that was largely self-inflicted. I didn't have a good list of all of the auto-payments I had setup - I chased those problems for months. It took 3 tries to get all of the accounts named as I wanted, there was trouble with the merchant processing and our field cc devices - it seemed endless. This was a connection through my BNI chapter, so I got some special assistance with the problems that probably wouldn't have been available otherwise. I love their low fees, and they have been quick to address anything that has come up since - just the startup was kind of a disaster.

I will say, though, that this discussion made me dig up their availability of funds document and read it again. Sometime between last year and this year, they have changed their cutoff time from 2:00pm to 3:30pm - that's a good thing!

Nige - I think I would ban checks as a payment method too if I had to suffer with your availability times!