Sending and receiving funds: it pays to know

In the world of business, you are ordinarily expected to operate in a business-like fashion. That usually equates with ensuring that conducting transactions with your customers is made as easy and seamless as possible, more so in our highly-digitalised global community where business can be conducted across borders in a matter of seconds. Sounds easy enough, right?

Perhaps, although that might directly correlate with which option you are hoping to use, or, are already exercising when it comes to the consideration (i.e. money or financial instrument of similar value) that is exchanged between each customer and you. Here is a brief highlight of some of the more common selections:

1. Cash- solid, hard cash is generally accepted in many, if not most places. Why? Of all the present modes of business consideration, this option is arguably the most fluid and definite. There is generally no drawn-out bureaucratic verification of what is presented in hand, and, especially when engaging in business nationally, or within the informal sector of any country, it is generally preferred. (Spoiler alert: US dollars are still globally recognised as the preferred cash transaction option, although Canadian dollars, British pounds and Euro dollars are gaining wider acceptance)

2. Cheque- this can either come in the form of: (i) a personal cheque (i.e. one that is pegged to a chequing account held in an individual’s name or that of his/her business at a commercial bank) or (ii) a bank manager's cheque- which is the kind that more entities and individuals are choosing to accept, as the money generated by that cheque has already been drawn from a legitimate bank account and signed-off by a senior bank official (likely the bank manager or his/her designate). Therefore, there is little likelihood that that cheque will be returned when an attempt is made to cash it. (i.e. the cheque will not 'bounce' or return to the issuer for a lack of sufficient funds)

3. Debit card- this is a cash-free option that can be exercised for the benefit of both client and business owner, as the funds are electronically ‘pulled’ from a bank account attached to the debit card holder, and transferred to the bank account of the business owner. However, note that: (i) if the bank account attached to that card does not have sufficient funds, OR (ii) there is a technical glitch with the debit machine (point-of-sale or nationally), OR (iii) an incorrect personal identification number (PIN) is entered, the card can be declined, and in some cases, captured by the machine in use.

4. Credit card- like the debit card, this is also a cash-free option, where the card holder 'receives now and pays later', through the concept of crediting/advancing funds to the credit-card, with the duty of the card holder to later repay the bank or other financial institution (to which the card is attached), when the credit card bill is generated. The risk with credit cards is that they can be abused (with or without the use of a PIN) to the point where no money/credit (based on the card's existing cap) remains. Plus, there is always interest to be paid on the balance, including any outstanding balance. (Cont'd on next page)