Small businesses rely heavily on maintaining a sound financial system and ensuring that their customers pay on time. So when half of UK small businesses are suffering from poor finance, that's bad news for small businesses. A recent study shows that small, medium and large companies have had many bounced checks. Small businesses with less than 10 employees are not affected. This can happen especially when someone pays a transaction by check for a product or service. The company pays it to its bank. A savvy business owner checks that the check has cleared and issues a new check based on the funds in the business's bank account. It later turned out that the money was not used and the owner of the business had exceeded it and was in debt. This means higher bank fees and makes it impossible for the store to expand in the future.
Understanding the Audit System
Most people know that checks take between three and seven business days to clear. The payment date depends on:
1. This money is registered money. Sterling checks in the UK clear more quickly than checks in French francs, for example.
2. If the bank that issued the money is owned by the same company as the bank that pays the money. Deposits take longer to clear when paid outside the same bank. 3. If payment is made on a business day. What most people don't know is that many "clear" banks check when the normal clearing period has passed. This sometimes happens before the bank realizes that the money is available. The bank makes the check available for withdrawal but is not actually cash.
Some unscrupulous people can use this to their advantage. For example, they may pay for a product or service by check, write the wrong amount on the check, ask for a refund, and use the money to disappear long before the money laundering process is complete. When the first check bounces, it's a small business that faces an angry bank manager and a huge debt. Help pay for business
Fortunately, there are other ways for businesses to make money from their customers. The first is the Banks Automated Clearing System (BACS). It is a secure process where payments take only three days to clear. This method is often used to pay checks directly to the employee's bank account. A more expensive system (which costs around £25 per transaction) is the House Automated Payment System (CHAPS). This system allows for same day electronic money transfer. Business owners who are concerned about eliminating excessive debt should consider having their customers pay through one of these methods whenever possible. This will reduce the high cost of NSF funding.
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