The Importance of Automatic Transfers (2024)

Small BusinessPaymentsPayment Processing

What is Cash Flow Management?

Proper cash flow management is one of the most critical parts of running a thriving business. Whether you’re a first-time entrepreneur selling handmade jewelry or a seasoned marketing expert providing consulting services, keeping a close eye on your cash flow is key.

Think of cash flow management as the process of efficiently managing the movement of cash into and out of your business. This includes forecasting future cash needs, collecting outstanding payments, and paying bills as they come due.

Though the cost of doing business varies between industries, many business owners are responsible for various expenses related to their company, from payroll to overhead. Businesses that ensure they have enough cash on hand have a better chance at meeting their financial obligations and taking advantage of opportunities as they arise.

That said, the better a business manages its cash flow, the more streamlined it can become, as adequate access to funds is critical to long-term operational success.

Importance of Cash Flow Management for Small Businesses

Cash flow management is especially important for small businesses because they often have limited access to credit and may not have the financial resources to weather a cash flow crisis.

From paying personnel to ordering inventory and supplies, business owners typically have a laundry list of expenses that need to be paid at any given time. That’s why a lack of available funds can severely impact an operation.

Without proper cash flow management and enough liquid funds to keep the lights on, you may not be able to remit invoices, complete payroll, or settle other monthly or annual expenses associated with running your business. Overall, good cash flow management is essential for the success and stability of a small business.

What are some ways to manage cash flow? Read on to explore the benefits of automatic transfer features.

What is automatic transfer?

Automatic transfers are set up by the account holder and future withdraws are initiated by your payment services company. This gives you access to your funds — whether daily or on a pre-set frequency — straight into your bank account. With any kind of automatic transfer, account holders can save time, and help ensure invoices and payments are not forgotten, which can support better cash flow management.

The two main types of automatic transfers include:

• Immediate transfer: Unlike a standard automatic transfer, which might take a few business days, an instant transfer gives merchants fast access to their money, usually on the same business day, without meeting strict standards However, given the speed, there are fees that might apply to this type of transaction.
• Standard transfer: A standard transfer gives business owners access to their cash within one to three business days or more (depending on your bank). Unlike an immediate transfer, there are generally fewer (or no) fees involved, depending on the processor.

Different ways to access funds

When leveraging automatic transfer features, merchants can access their available funds via their bank account. In fact, PayPal’s automatic transfer feature helps you access your funds when you need them.

How long does it take to receive funds?

When accessing funds, money is generally available the same business day.

Transfers, like any type of transaction, are subject to review, and they might be delayed or stopped if an issue is identified. For instance, PayPal may place a payment hold if they need more information from you about a transaction before releasing the funds.

Get funds quickly and automatically with PayPal’s automatic transfer feature

For PayPal users, you can turn on PayPal automatic transfer once you sign into your PayPal account. It can be configured to occur daily, weekly, bi-weekly or monthly. In turn, this can help you better manage your cash flow by gaining access to your money exactly when and where you need it.

You can automatically transfer your PayPal balance to your bank account at your desired frequency (such as daily, weekly, or monthly). Plus, PayPal automatic transfer allows you to set a minimum balance to ensure there’s always money remaining in your account to cover instances like refunds, purchases, expenses, and other business needs.

Learn how to set up automatic transfers with PayPal.

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