ACH Payments, Banking Fees & Cash Flow for Photographers

Why Payments Take 2–7 Days

• Banks don’t transfer money instantly
• Processing happens in cycles (not continuous)
• Weekends + holidays slow everything down
• Payment platforms add their own internal delay
• Key idea:
• 
  
  • “Even when a client pays instantly, your bank doesn’t receive it instantly.”

Transcript

SPEAKER_00 0:01

Well, hello there, photographers. If you're like me and you're wondering why your client payments are delayed, ACH and banking fees are gonna be explained right now. This is very important business stuff. If you're excited, let me hear you. Come on, I know you're excited about banking fees. Whatever to deal with these days, Venmo, Cash App, Honey Book, 17 hats. I don't know. Whoever it is that you are using this. If you are like me and you're using a CRM, a customer, a client relations management software, like Honeybook. I'm just gonna use them as an example since I do use them. And there's there's some things that we we need to talk about in this podcast because the business of being in business has costs. Okay. That's just fair to say. Cost of doing business. However, I'm gonna give you a little scenario here and you're gonna understand the importance of why I'm even doing this podcast. Okay. If you're like me in today's economy, whether you're a family man like myself with a house and a business and insurance payments and blah, blah, blah, um, you know, what's very important, obviously, is when you earn your money, you actually get your money. I know that sounds uh weird, but this is this is let me give you an ex an example here. I can't even speak. I'm so excited about this. So excited. Um, a lot of times with Honeybook, when a client pays me, that money does not go in my account the next day. Okay. And it's always it's bothered me because the past couple of years when business is up and down, like for photographers, we're in New Orleans at least. Some a lot of times we're slower in the summer. It's extremely hot. Everybody leaves to go out of town to the beach or Disney or the mountains. I don't know. People, it the summer's slower. So your regular life bills keep coming, your house note keeps coming, your water, your electricity, your phone, your cell, your car insurance. You see where I'm going with this? So your life bills keep happening, but your income may slow down. So, yes, there are some things that we could talk about as far as being prepared for that, but that's not what we're doing today. Today we're talking about the hardcore truth of why your client payments are delayed. And uh, you know, what is the difference of ACH and banking fees online compared to a credit card payment, which by the way, via honeybook, it is still delayed. I'm a little aggravated about that part. Um, I call it ransomware, not ransomware, but it's like a ransom fee. You know, a client pays me on a on a credit card via honeybook, and it says, yay, your client paid you your balance. It's like, sweet, I need that money in my account because you know, my household just came in. It's due, it's coming. I've got three other bills that I need to pay. I need my money now. You know what I'm saying? So this is a reality, and I think all of our lives. It's not just me. Many of us are living pretty much paycheck to paycheck. And what Honey Book does on a credit card fee is it usually it's a couple days before the payment hits our account. I never understood why. Okay. Now, that's a whole nother podcast we're gonna have to get into. I'm gonna see if I can contact somebody with Honey Book that wants to get on here and actually explain this stuff. Um, but when it comes to an ACH fee, a transaction, online banking, when you can go online and pay your bills online. What I'm kind of guessing is there's a difference in how it is maintained and handled. So let me read this to you, okay? Because I did go to chat, GPT or Manus. I think I use Manus, and I was like, um, can you help me out here and explain this? Okay. Online bill payment and ACH transfers are closely related but are not exactly the same thing. While online bill pay often uses the ACH network to move money, it is a broader service that can also involve physical checks. I have compiled a del a detailed comparison of the two methods, including their mechanisms, control levels, and delivery methods. Please see the attached report for the following breakdown. Okay. Um going down here, I don't see anything beyond S research online pages. I guess. Alright, so this is an an example. Okay. One thing that this thing comes up and tells you is that uh so I'm gonna read this to you. This is straight from Chad GPT, all right. A pro tip for photographers. A lot of pros do this hybrid approach. Use ACH via honeybook or larger invoices, meaning like your weddings, your commercial work, blah blah blah. Um, use faster methods like Zell, credit cards, instant but higher fee. Uh the balances for cash flow and cost efficiency. All right, guys. So this is this is very interesting. Uh, ACH fees. ACH feels slow. Let's try this again. Testing one, two, three. ACH feels slow because it's not designed to be instant, it's built around batch processing and bank verification, not real-time movement like apps such as Zell or Venmo or well, Square. I I get payments the following day via my business. Um, so a lot of times I'll send my clients a Square invoice. And the reason why I do that is because I know my payments are gonna be in my account the following day rather than when they pay it straight through Honeybook. I have a three to eight to ten day delay sometimes. And for somebody that's trying to pay bills that are on my desk right now, that's difficult. Okay. And that's very very aggravating. So continuing to read, uh uh batch processing. ACH runs through the automated clearinghouse network. Payments are grouped into batches, not sent one by one. Banks submit these batches at specific times during the day. If you missed a cutoff, like say four o'clock is gonna roll out, uh, it rolls out in the next batch, um, which is usually the next day. Uh, that alone can add hours or full business days. Clearing between the banks. Here's one of the issues, okay? So when you use a CRM like Honeybook, Honey Book has a setup. First of all, your fees with the C ACH, you're gonna have a fee from your bank to handle the process. Honeybook is gonna charge you a small fee for handling the process. Then, then after the banks are they clear, they tell each other this is safe, okay. Then Honey Book says, You'll get your payment within two to three business days now. It's like, wait a second. I just I just waited so many days. It said it was cleared. Why are you taking an additional three days to get to me? Um, that part I kind of sort of don't understand. Um, only I just call it ransom, I call it a ransom fee because for the one percent fee of that sale, they can do an instant deposit for you. Yeah, you can get it today, but you got to pay an extra 1%. Me, I think that's highway robbery. That's just me. Okay. When I need my money and my clients pay me, it's my business, it's my client, it's my sale, it's my money. I need it. I need it, I gotta use it, I gotta pay my life and move forward. It's that simple. If all of these digital payments are gonna start taking three days to a week every time, you know, when you have a business where that money is constantly coming in every single day, you don't feel it so bad. But I'm just putting this into perspective for those who need their payments when they're paid. Um, this will kind of make you think about how am I gonna set up my business to accept payments. Okay. So a lot of businesses um where you go get coffee or food or whatever it is, um, a lot of those things are are instant. Okay. Um, but continued continuing to read here. Uh clearing between banks, ACH isn't just send and receive, it's a two-step process. Your client's bank sends the payment, your bank receives and processes it. Between those, the network run by the NACHA clears the transaction, files a verified, and settled between institutions. Think of it like middle checkpoint instead of direct handoff. Risk and verification window. Banks intentionally slow things down to check for fraud or unauthorized transfers, confirm sufficient funds, allow time for returns or rejections. ACH can be reversed in some cases, insufficient funds or unauthorized debit. That's why platforms like Honeybook hold funds even longer. So, to back up where I was just saying, it's basically a security protocol. And even though it's digital, there's still a tunnel and a funnel that these things need to go through. And both people, your bank and honeybook, with their bank and their transactions, they have a process too. Um, you know, things are just gonna take a little slower, but it's actually for your benefit that when that money does come in, it is safe and secure and it's it's good to go. So I wanted to make this podcast because I'm getting a lot of conversations with people who are using like Honeybook and some other CRM features, and they're dealing with the exact same thing. They're like, wait a second, my pay my client paid credit card, and what's going on? And it's like, well, go look into your payment description and how was it paid? If it was online banking or if it was a direct ACH, even though your bank accounts are plugged in, um, these are the issues. Why? So here it is on chat number four. Uh, business days only. ACH does not process on the weekends or federal holidays. A Friday payment can easily land Tuesday or Wednesday. Okay. So just when we got away from a check, a handwritten check, here you go. You know how you behind that old lady in in uh you know, Windexy Robert's, wherever the heck your your grocery store is, and she's writing that check, and everybody's like, oh, she's so slow. Yeah, well, you had no idea that the vendor she's paying that grocery store can deposit her check immediately, and it happens that same day. However, all those credit card fees are not going into that grocery store's account the following day. Sometimes these things are happening for security purposes, you know, on a credit card fee, usually a couple days, um, if not the next. So same day ACH exists, but there is a faster version. Same day ACH processed in a few hours, but not all banks slash platforms use it. Often has cutoff times, early afternoon, and it also may include fees, which is the reason why HoneyBook needs to charge their 1%. Okay. I originally was thinking Honeybook was making that 1%, but it uh it's showing me right here that that instant fee from the ACH process is gonna charge them a fee to do it, which is why Honey Book is passing that on to you. So simple breakdown typical timeline, day zero, client pays. Day one, sent in batch and cleared. Day two, received by your bank, day three, available in your account. Now look, if this would happen in three days, I wouldn't be doing this podcast because that wouldn't be a big deal. It's the fact that I have a client that paid me over a week ago. Um, I just got notification from Honey Book that, hey, good news, the the bank cleared, you know, verified that payment, but then it continues to tell me you'll now see it within two to three business days. I don't know what's going on. I'm just gonna safely assume that Honey Book is a smaller business, okay, that does not have the larger capabilities of a much larger institution that has these setups, you know, to where yes, but they're gonna go ahead and process the payment overnight because you're so big. Maybe Honeybook isn't that big. I don't know. But it's just very important for you to know that just because you have a corporate gig coming up and they're saying, can we pay via ACH? Two things. First of all, you need to know how long it's gonna take to clear your bank. Because if you're like me, um, my clients do not receive all of their images until the dollar amount clears my bank. All right, it's not fair. I was burned one time, one time a very long time ago, um, where I delivered the products and the client just dragged their feet on paying that remaining balance. Dragged. And I was like, why am I chasing down people for something I've already done? I've already done the job. They have the product. Why am I? And then they throw me on, oh, you're on net net 60. It's gonna take 60 days. I'm like, what are you talking about? So if you miss my other podcast, there's another one talking about net 30 and uh, I believe net 60, and uh basically reoccurring vendors can be on a net 30, which normally means, hey, this is a reoccurring, reoccurring vendor. Say somebody bringing, you know, there's a as a business bringing the fruits and vegetables to a restaurant, and they're gonna be there like every day, every other day. That's a reoccurring vendor. Well, sometimes it's easier with accounting to put you on net 30, and every time 30 days comes up, wherever that balance is that you've been doing, you get that payment sent to you. But you're continually being a process, so it's not that big of a deal. Once you get that first net 30 out of the way, it winds up being continuous, and then you're on track. However, if you're like me, if you're a small mom and pop business and you you are you do your service, you should be paid for your service. We are not net 30, we are not net 60, we're not a recurring vendor. Usually it's uh for photography. You know, it's a wedding, you're gonna do the job, produce, go. It's a corporate event, same thing. Okay. So just because these larger corporate event people may have net 30 or 60 in place for the rest of their business does not mean you need to agree to that payment format because you you personally are not a recurring vendor, right? So, anyway, going back to maybe what should you do, you know, as a business. Well, uh something very simple that seems to make sense to me is just offer different payment methods for your clients. You know, a uh seminar speaker a very long time ago, when uh the digital world was was new and um is way before Venmo. This was this was other digital ways of being able to get your money. Uh, somebody said a long time ago, never block your clients from paying you. You know, it's kind of like the old saying, you know, back in the day we didn't accept uh discover. And the reason why we didn't accept discover, because back when accepting credit cards was a more individualized business thing, Discover Interest for me, in other words, what it costs me to accept the credit card was higher than Visa and MasterCard. Visa MasterCard was like 1.5, 1.8, and uh Discover was like three, four percent, if not higher. And it's like what? And um, yeah, some rewards cards that one percent cash back that you get, how do you think when you own a card that does the one percent cash back, you think Visa is paying you that one percent, don't you? Like, oh wow, this is a great beautiful card. They are gonna pay me the one percent cash back. That's wonderful. I don't care how I get it, as long as I get it back, right? You're the consumer. Okay, here's the truth. The truth that I came across was the vendor is charged that one percent. Not Visa. Visa handles the transaction, but they're collecting it from who you're getting, who you're buying from. Is that a shame? So when I tell you the government and other agencies and businesses that are affiliated with handling all of what we do, whether it's our taxes, sales taxes, credit card fees, we have so many little things to worry about as a business. And you would think it would be easy, but it's kind of not, you know. The only, only, only response I have for you on this podcast was first of all, do your research. Okay, like do your research, like physically call customer service if you need to. When you have questions, usually they're great at answering your questions. But being in business, accepting credit cards, or even like even Venmo, Venmo has a fee now too. All right, it used to be a cash way of paying people, and that went away. So the government gets their hands on every single business, and everybody takes their damn money. All right. So when you're going to the coffee shop or the sandwich place or me or whatever it is, and you go to use that credit card and it has an additional 3% service charge, you need to know that it's there for a reason. It's there because they're charging me, and it's my cost of doing business, which is passed on to you. And I know what you're thinking. Well, shoot, just include the three percent more in your cost, just go up a little bit, and then all your credit card fees and all are taken care of. Okay, in certain aspects, that does work, like on a wedding package, on a full day's service, you know. But we we know how people are paying. We include everything in the one fee. You're paying it, you just it's just included. All right. On a smaller scale, though, of how you are experiencing going to get a coffee and you know, or whatever it is, and you're seeing that extra fee, and it's like, why? Well, the reason why is businesses are giving their clients the opportunity of having to spend that 3% or not. That is your choice, you know. And if you think about it in the grand scheme of things on a smaller scale, it's kind of not fair to go up three percent for everybody, and then the people that aren't paying that credit card, they're paying that 3% fee regardless. So it's kind of not fair. So there's two ways to look at it are you looking at it through your consumers' eyes, like it's better for them to have an option, let them choose, or let's all just go up in prices, include these fees and go. The problem, the problem, is when those fee amounts change. Okay, that's why we can't just include it in our cost. You know, these credit card systems are always getting bought out, they're changing their fees, their numbers, their transaction fees, you know, Square, PayPal, whoever it is, they want up making a change, you know, and to continually use their service to be able to use Square, to use PayPal, to use whatever it is, you have to click the little yes, I agree thing so you can continue your business. But when they make a change, you're you're stuck with that change. That's all I can tell you. So that is why the added fee is there. Does that make any sense? Yeah, okay. Just making sure. Oh, stop. Stop. Terrible. Y'all, y'all are terrible. Y'all get too way too excited on bank fees. Um, so anyway, this is the nasty nitty-gritty of being in business that many artists in general, not just photographers, just creative people in general, um, don't want to mess with. We just want to do what we do. We just want to we just want to enjoy life, make you love what we do, continually improve on our craft. And uh, you know, we live in on Earth. I'm gonna say Earth, because if we take money to Mars, I'm gonna be very angry. Very angry. You know, I think we need to devise a whole different plan on how we're gonna live. Because money has been the most corruptive, evil aspect of all of our lives. All of our lives, most of our wars, especially at war now. It's like, oh, it's a problem. Letting go of that stress, moving forward. This is part of life, this is part of business, this is something you need to learn, but you do need to deal with it, you do need to operate your business correctly because uh I'm gonna start closing out this podcast on this little note here, okay? Um, a couple years back we were not charging the extra three percent just because I didn't many, many years ago taking credit cards because it was like one point something, and you just kind of figure that's a small little pinch per sale. I'm not gonna charge more for that. And like I said, fees go up. Well, over the years, fees have gone up, and now it's it's right at around three percent of all of our total costs. So a year or two ago, we did the math and looked at okay, that three percent that we're paying on credit card sales, which by the way, it used to be credit card sales were like half and half, or even less than that. People were not throwing things on credit cards like they do now, you know? And the biggest reason is because now there's so many reward ways to have a card, a lot of times it makes sense to use that card. I get it. But looking at two years ago, what was my three percent for the year? What did I pay in three percent fees for the whole year? And when I tell you it was it was it was an easy school's tuition for one child in grade school or really close to it, and you start realizing, okay, um, we need to start collecting these damn fees. I mean, I shouldn't have to be paying money to be in business, you know, outside of what you designed to be in business. So I'm just I'm telling you this. So for all those people who are still there where I was, where you're not collecting that extra fee, just know what you're losing. And it is a loss. And I hope your CPA knows about your loss. Hopefully, that's a write-off. Uh, that's a topic I need to go talk to my CPA. I don't know if that 3% is a write-off. It might just be cost of doing business and it's not a write-off. So it might be one of those shame on you for not collecting it somehow, some way. And um, it's a loss to me, but it's not a loss I can actually write off for my federal taxes. Not a shame. So, yeah, besides taking pictures and knowing about your F-stops and your shutter speed and how to pose, your lighting, how to be marketable, how to be on Instagram, how to do a TikTok. You should be on YouTube, but you're probably not. You should also really look into investing into Facebook a little bit differently than you're doing now because the age ranges of who can afford your services are very different from what you think your client actually is. Meaning that high school senior who's choosing you, guess who's actually paying that bill?

unknown 26:03

Mom and dad.

SPEAKER_00 26:04

Okay? Mom and dad. You know who's on Facebook? Mom and dad. So that's who I need to love me. I need the grandmas to love me. I need the daughters to love me. I need everybody to have a good time using me as their photographer, and they need easy ways to pay me, and I need to be fair in my pricing, and we all just need to get along. You know what I'm saying? So, yeah, man, there's so many things to being a business that are a pain in a butt, and it's stuff that you're not seeing on TikTok. All you're seeing is come with me or an engagement session. I'm gonna show you how I rock this place, and it's all amazing and beautiful, and I'm the best. That's not your complete reality. That's just your marketing. That's that's just that's a pinch. It's not even one percent. You realize that, right? Like your marketing to yourself, depending on how much you're actually doing, is such a small percentage of what it takes to be in a business and wash, rinse, repeat every month, every quarter, every year. All right. I've been doing this. This is my 32nd year in business, so this October makes 32. Um, I just made 32. Oh god, October makes 33. Wow. That's that's something you know yeah, crickets on that one. Um there's just been so many things that we've been having to do on the back end of the actual business. Trust me when I tell you, the fun part is when I work. That's the easy part for me. You know, having a photo shoot at the end of the day gives me something to look forward to. And while I'm dealing with all this stuff that we're talking about throughout the day, emails, contracts with clients, blah blah blah, processing images, getting things online, paying that bill, everything costs money. Even my online feature. Everything costs money, dude. Everything, nothing's free. Uh, absolutely nothing is free. When some of when somebody gives you something free, either you pay for it somehow, or it's somebody's taking a loss, which I seriously doubt they're doing if they've been in business for a very long time. If you've been in business for a very long time, you know how to adjust your pricing accordingly to where it's fair without you having to go up so high. However, all of your cost of doing business is covered. Hmm. So, look, if you would like to get on the podcast, uh, maybe you have some questions. Maybe you want to get on the podcast. It's just a phone call. Uh, I am not doing video at the present moment. I think phone calls are much easier. Um, I can get you in here on the podcast. And trust me when I tell you, for the questions that you have, there's a million other people that are asking the same questions, but they're just not getting here on the podcast. So if you want to be on the podcast, I invite you to uh leave it in the contacts, Instagram me, you know, find me. It's gotta be, I know there's an easier way for you to definitely get on here. So if you're on Spotify, you can definitely have uh a comment section right there. If you're on my Buzzsprout um podcast page, you can definitely leave me some fan mail or something like that. But I invite you to be on. I love your questions. Um, I do not know everything, but I know a lot. And I'm one of those kind of guys that if I do not know something, then I just know where to go find the answer. And hey, look, things have changed. You and I can uh get on chat GPT and ask a question. You still need to validate it, you know. You still need to make sure that what you get as an answer through chat is up to date and legal. So I'll ask my CPA, hey, is this true? And uh every once in a blue moon, she's like, Well, actually, this just changed in uh in the law going for your April 15th projections. I'm like, really? Well, how come chat didn't know that? Well, chat only knows what humans tell it. All right, it does doesn't know everything, it's not God. It is a software program designed by humans, and all the information that is on the internet is not true. So validating all the information to make sure it's true is just part of the process. All right. So do not believe in AI completely, please. Remember, humans made it. All right, straight up. Oh wow, why not have 30 minutes? Okay, well, if you were out for a jog and uh you're headed back to your location where you started, I'm so glad this podcast fit your timing perfectly. Um, I have uh a couple things to do today, but I'm looking forward to uh going to Rouse's andor going to Zapardos. I'm looking at who has good fish. I'm gonna cook some fish tonight. And uh yeah, man, I'm gonna go rock my day. And uh saying that yeah, this is my band, you guys. See him on the next budget.