4-min read Dec 30, 2022

The Newest Update in The Banking World: Checks Are Unexpectedly Taking Longer to Clear

The Newest Update in The Banking World: Checks Are Unexpectedly Taking Longer to Clear

Having a plan for managing cash flow is of the utmost importance when running a business. To have an effective strategy, business owners must always know what to expect when dealing with their finances. Keeping up with changes in the banking world can help business owners understand how to manage their cash flow and run a more successful business. I recently ran into a major change in the banking world that will force business owners to adjust their cash flow management strategy and develop a new plan.

An old acquaintance, who I will call John, reached out to me last week. He has been running a business for quite some time and is very on top of managing his small business cash flow. However, something happened to throw him off his game and I was completely shocked by this new development he told me about. Checks are unexpectedly taking longer to clear. Normally, a check could be expected to clear within 2 days, but recently they have been occasionally taking up to 10 days to clear. With this new development, business owners may not have the cash when they need it for payroll and other essential expenses.

John has a special education agency and relies on remittances from insurance to pay his employees. He has an established business and has positive cash flow management in place. He knows what to expect and is always able to cover payroll on time, until this curve ball came his way. He relied on a large check from insurance to cover payroll, but it took two days longer than expected to clear. When it came time to run payroll, there was not enough money in the bank account.

how to manage their cash flow

I talked to other business owners and financial consultants about this recent development and while I did not do extensive research, I have found that many business owners are experiencing the same problem. Businesses that until now had good cash flow management are suddenly facing a new challenge because their strategic planning does not work for the new reality. Despite making large deposits, the money is not available. Not being able to rely on checks to clear on time for payroll and other timely expenses is a huge stressor for business owners that needs a solution.

Luckily for John, his bookkeeper had been putting aside money in a reserve account over time and there was enough money there to cover payroll this time. Setting aside cash regularly in a reserve account for those ‘just in case’ situations is a smart thing to do. Without this reserve account, John would have had to take out a loan, and while there are many good loan options available, having your own cash reserve is ideal.

The reason that this is happening is still unclear, but some possibilities for the delay could be due to an increase in fraud or an upcoming recession. Regardless of the cause, it is important to be aware that this change exists and to adjust your cash flow management strategy accordingly.

cash flow management

Simply knowing what to expect is crucial for cash flow forecast. Setting aside a cash reserve for payroll is an important proactive strategy to ensure that your business is prepared for anything unexpected. Another solution is to get paid via ACH (Automatic Clearing House) or EFTs (Electronic Fund Transfers) instead of checks. Inquire with the companies you receive checks from to see if this is possible. This option would significantly reduce the wait time for the money to show up in your account.

Being a business owner requires you to be smart and proactive with cash flow management. Setting yourself with an emergency plan for when your anticipated cash flow trajectory falls short of what you expected will keep your business on a path to success.


This article is brought to you by Morris Reichman, CEO of PAYRO Finance. PAYRO offers a payroll specific loan designed for businesses to cover payroll when cash flow is tight, because so many business owners, so often spend too much time managing cash and worrying how to cover payroll instead of growing their businesses. To learn more CLICK HERE to get in touch.

Morris Reichman


Morris Reichman is the founder and CEO of Payro Finance. Former Vice President at Infinity Capital Funding an alternative finance company, Morris possesses a versatile background in the finance industry. Having spent 7+ years working across global macro operations and start up corporate finance Morris's expertise is in business accounting, risk management and investment analysis. Morris founded Payro Finance to support business owners and ensure their business continuity.

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