>>>Like I said, there's no system, only individual agreements. So you may just be lucky, dealing with entities that your bank knows. It's not a rule. There's no rule, except one: it depends.
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>>True, there is no single agreement. Most of my check payments go to large institutions like utilities, phone companies, credit card companies (banks), and the like, and they all do rapid electronic processing these days.
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>>I worked with a credit card processing company for a while and was surprised how fixated merchants are with cash flow. To a lot of them it makes a huge difference whether they get their money the next day or the day after. Most of these companies seemed to be doing pretty well, at least racking up a lot of credit card sales, but they acted like they were living hand to mouth.
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>So far I was discussing this as just me, but come to think as a business - what's the business model of a merchant? Buy, store, display, sell, get the money and buy next. Now if you're a really good merchant, you can do your part of the work really fast, and can even shore up suppliers who can do theirs really fast - you can order today, have it the next day, sell by day after, and then... wait a few days to get your money so you can make another turn?
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>Specially if it's true what the retail guys say, that they're operating at 2-3% margin - that may be true, but what also matters is how many times you make that margin, i.e. how fast you get the money for the next cycle. Now if the bank is making that cycle unnecessarily long, or if the credit card processor charges 4% to do it immediately, your 2-3% margin looks miserable. Of course, cash is money the moment you ring it up, and you wait for nobody.

That depends which retail guys you talk to. 2-3% margin may be true -- and it may be very far from true. It varies wildly by industry. If you're in the grocery business and you've got a 2-3% margin, you're doing well. In other industries you would be way behind the pack.

Also, turns is an inventory term. (The number of times your inventory turns over per year, i.e. annual sales divided by average inventory value). As long as you have enough cash to keep buying more, cash flow isn't going to be a brake on operations.