What Is the Float? 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.
What causes a float in a bank account?
Float can be brought on by errors made when handling money and managing accounts. Such mistakes include sending money in the incorrect amount or to the incorrect bank. There is a formation of float in the company's account as a result of the attempts to identify and correct these errors.
Why does a bank float a check?
An increase in transactions for gift-giving can cause processing delays, and inclement weather can make transporting checks and funds more difficult. Float is also usually higher at the beginning of the week, as checks cashed or written over the weekend must process once financial institutions open again.
