Check Clearing
There are many mysteries to life and one of those seems to be clearing a check, particularly a business check. However, with research you should be able to demystify this process.
Have you noticed that checks may clear differently in your account? This is not a random event. However, it usually is a bank specific event. Do you know your bank’s clearing process? If not, you really should sit down with a bank employee and understand their process as it pertains to your business account.
When our dog swim business was operational, we specifically chose a local bank that told us they would clear our checks in one day. Running a dog swim business required a lot of capital to keep the water clean and it was important to make sure we had access to our funds sooner than later. We did our research, met with the bank that seemed to be most appropriate and confirmed how long the normal process would be to clear our checks. They never failed us and it took any mystery out of funds availability. This allowed us to concentrate on swimming dogs, the reason our business existed.
Each bank makes its own policy around clearing time for checks. Some may be more conservative, others more liberal. Often, the timeframe may be a function of your credit profile, or the amount of the check, or the location of the bank the check is written on or a combination of all of these. Rather than guess, meet with your bank and understand their policy as it pertains to your account.
We have personally experienced check clearing time anywhere from one business day to up to seven business days. That can be quite a difference for your cash flow, particularly if you need to write checks out from that check to your own consultants on a project. This is precisely why you need to understand the check clearing policy of your bank as it pertains to your account.
Just like dog breeds, banks are not the same. Dog breeds have been bred for specific behavior And banks have been designed for specific focus areas as well. It is amazing how many parallels the dog world can provide to our own daily lives.
There are credit unions, savings banks. Community banks, commercial banks, international banks, the list can go on and on. Check clearing timeframes can be some of the most important factors in the bank you choose. Do not make the decision in a vacuum. Research online and in person. Also, the deposit agreement given to you when you opened the account may also reference check clearing times. This should not be a difficult aspect to identify.
Take the mystery and the unpredictability out of your check clearing time. Stop in to the local branch you bank with or are planning to open an account at to confirm your expectations of when your money will be available.
Often, people choose a breed of dog based on its specific purpose for which it was bred - guarding, hunting, companionship. Choosing a bank with the clearing time that works for your business is no different. With minimal research, you should be able to identify which characteristics of a bank’s clearing policy work for your business.
Be well.
