What is a negative float?

A negative float is a term commonly used in the banking industry and has to do with a time frame that exists from the moment the bank's customer writes a check and this check actually cleans the bank account. The amount of a float associated with a given account is based on the number of transactions initiated by the account holder, but the institution must still be cleaned. Although the term once had to do with the inspections written, but not yet cleaned, the float may also include debit card transactions that have been received by the seller, but have not yet been used against the balance of the bank account.

One of the simplest ways to understand the concept of a negative float is to consider a check account that has a current balance of $ 5,000 (USD) at the beginning of the calendar month. The account holder issues one check of $ 1,000 to pay the rent, another check of $ 100 to pay an account for the service, and then make a $ 50 debit card purchase in the local supermarket. Total number of these tRome does not clean the bank account at least until the next working day, which means that the account has a negative float between $ 1150.

The amount of float the time associated with the settlement of the negative float will vary depending on how quickly a transaction of control or debit is presented for payment. In some cases, debit card purchases may not charge two working days based on when the supplier introduces them to the payment. The time required for checking to clean up the account will also differ. A check written to a local seller, who also accidentally trades the same bank, can be deposited at the beginning of the next day and erase the account later the same day. On the other hand, the check that is sent to the creditor may take several working days to clean the bank.

NEGAFLOAT monitoring is important for the control account management process. Holders of accounts BUDou use what is called the control register to monitor transactions initiated in the account, which facilitates identifying the current balance, a less negative float that can currently exist. Maintaining an accurate registry that is up -to -date for all cleaned and waiting transactions facilitates the transfer of account balance and sanctions or checking for non -states.