Clearing Period

A client showed me the other side of the 3-day clearing period and why this can be treated as a benefit rather than as an inconvenience to some.

For those not really familiar with the whole process, a deposited check is "cleared" only after 3 banking days, usually. If you were the supplier and a client gave you a check and you deposited it today, you'll expect the proceeds of that check to be credited to your account only after 3 banking days. For you, it's a nuisance since you'd have to wait to be paid. 

And that's exactly what you want, if you were the client of the supplier. First, you get a 3-day window to make sure you've funded that check. Another, and this is the more crucial part, you can still get back at the supplier if ever he comes up short. That's because you haven't actually paid him yet although he's deposited your check.

Say, for instance, the materials you ordered were substandard or not at par with what you expect. You can still complain about this and can allow the check to bounce if you're not happy (and if you're willing to shoulder the penalties associated with this). That's a pretty powerful benefit.