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Managing float measurement

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What are some ways to manage your float and how do we measure float?

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What are some ways to manage your float and how do we measure float?

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Managing Float

There are several kinds of delay that create float, so cash managers refer to several kinds of float. There are three sources of float: one, the time that it takes to mail a check; two, the time it takes the party to process the check after it has been received; and three, the time that it takes the bank to clear the check and adjust party's account. The total collection time is the sum of these three sources of delay.

Of course, delays that help the payer, hurt the recipient. Recipients try to speed up collections. Payers try to slow down disbursements. Both attempt to minimize net float.

Consumers likely have experienced attempts by companies ...

Solution provided by:
Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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