What is float management in finance?

Float Management in finance refers to keeping a watch on the timing of cash flows and implement strategies to maximize the advantages of the time gap between the funds getting deposited and cleared (float). It serves to earn more interest by extending fund availability, increasing liquidity, and managing working capital by optimizing cash flow.

What is a float in banking?

In financial terms, the float is money within the banking system that is briefly counted twice due to time gaps in registering a deposit or withdrawal. These time gaps are usually due to the delay in processing paper checks. A bank credits a customer’s account as soon as a check is deposited.

Why is float management important?

Efficient management of floats improves cash flow, reduces overdrafts, and improves holistic financial performance. On the contrary, a lousy float management system results in problematic cash flow, leading to financial instability.