Average Daily Float Calculator
This tool calculates the average daily float over a specified period. Daily float represents funds that have been transmitted, but are not yet available to the receiver. Calculating the average helps businesses and individuals understand typical fund availability delays.
Enter the daily float amounts for each day in the period you want to average, separated by commas, spaces, or placing each on a new line.
Enter Daily Float Amounts
Understanding Average Daily Float
What is Daily Float?
Float refers to the money within the financial system that is temporarily counted twice due to time differences in recording transactions. **Daily Float** specifically refers to the amount of funds tied up in this process on a particular day.
It commonly arises from the time lag between when a payer sends funds (e.g., writes a check) and when those funds are actually deducted from their account, and the time when the receiver deposits those funds and they become available in their account.
Why Calculate Average Daily Float?
Understanding your average daily float is important for:
- Cash Management: Provides insight into the typical amount of funds that are unavailable, aiding in liquidity planning.
- Efficiency Assessment: Can highlight inefficiencies in the payment collection or disbursement process if the float is consistently high.
- Banking Relationships: Helps in negotiating banking services based on typical balances, including float.
Average Daily Float Formula
The formula is straightforward:
Average Daily Float = (Sum of Daily Float Amounts) / (Number of Days)
For example, if the daily float over 5 days was $1000, $1500, $800, $1200, and $1000, the average is:
Average = ($1000 + $1500 + $800 + $1200 + $1000) / 5 = $5500 / 5 = $1100
Average Daily Float Examples
Click on an example to see the calculation scenario:
Example 1: Small Business over a Week
Scenario: A coffee shop wants to know their average daily check float over 5 business days.
Daily Float Amounts: $250, $310, $180, $290, $220
Number of Days: 5
Calculation: Sum = 250 + 310 + 180 + 290 + 220 = $1250
Result: Average Daily Float = $1250 / 5 = $250
Conclusion: The average daily check float for the week was $250.
Example 2: Personal Account Check Float
Scenario: You want to track the average float from checks you deposit over 3 days.
Daily Float Amounts: $800, $1200, $550
Number of Days: 3
Calculation: Sum = 800 + 1200 + 550 = $2550
Result: Average Daily Float = $2550 / 3 ≈ $850
Conclusion: Your average daily check float for these 3 days was approximately $850.
Example 3: Corporate Payroll Float
Scenario: A company issued payroll checks and tracks the float as employees cash/deposit them over 4 days.
Daily Float Amounts: $50000, $120000, $80000, $30000
Number of Days: 4
Calculation: Sum = 50000 + 120000 + 80000 + 30000 = $280000
Result: Average Daily Float = $280000 / 4 = $70000
Conclusion: The average daily payroll float was $70,000.
Example 4: Understanding Collection Float
Scenario: A company receives customer payments by mail and tracks the float from when checks are received to when funds are available over 7 days.
Daily Float Amounts: $15000, $18000, $16000, $17500, $14000, $0, $0
Number of Days: 7
Calculation: Sum = 15000 + 18000 + 16000 + 17500 + 14000 + 0 + 0 = $80500
Result: Average Daily Float = $80500 / 7 ≈ $11500
Conclusion: The average daily collection float over the week was approximately $11,500.
Example 5: Discounting Weekends
Scenario: You only want to average float for the 5 business days in a week.
Daily Float Amounts: $1000 (Mon), $1200 (Tue), $950 (Wed), $1100 (Thu), $1300 (Fri)
Number of Days: 5
Calculation: Sum = 1000 + 1200 + 950 + 1100 + 1300 = $5550
Result: Average Daily Float = $5550 / 5 = $1110
Conclusion: The average daily float for the 5 business days was $1110.
Example 6: Longer Period Average
Scenario: A large company averages its float over a 30-day month.
Total Sum of Daily Float Amounts over 30 days: $1,500,000
Number of Days: 30
Calculation: Average Daily Float = $1,500,000 / 30
Result: Average Daily Float = $50,000
Conclusion: The average daily float for the month was $50,000.
Example 7: Including Zero Float Days
Scenario: Averaging float over a 5-day period where some days had no activity resulting in float.
Daily Float Amounts: $500, $0, $750, $0, $600
Number of Days: 5
Calculation: Sum = 500 + 0 + 750 + 0 + 600 = $1850
Result: Average Daily Float = $1850 / 5 = $370
Conclusion: Including days with zero float activity gives an average of $370.
Example 8: Using Multiple Separators
Scenario: Entering amounts with a mix of commas and spaces.
Input: 1000, 2000 1500, 1800
Parsed Amounts: $1000, $2000, $1500, $1800
Number of Days: 4
Calculation: Sum = 1000 + 2000 + 1500 + 1800 = $6300
Result: Average Daily Float = $6300 / 4 = $1575
Conclusion: The calculator handles different separators to find the average, which is $1575.
Example 9: Small Numbers
Scenario: Averaging small float amounts.
Daily Float Amounts: $15.50, $22.30, $18.75
Number of Days: 3
Calculation: Sum = 15.50 + 22.30 + 18.75 = $56.55
Result: Average Daily Float = $56.55 / 3 ≈ $18.85
Conclusion: The average daily float is approximately $18.85.
Example 10: Consistency Check
Scenario: Calculating the average for several identical float amounts.
Daily Float Amounts: $500, $500, $500, $500
Number of Days: 4
Calculation: Sum = 500 + 500 + 500 + 500 = $2000
Result: Average Daily Float = $2000 / 4 = $500
Conclusion: As expected, the average is the same as the consistent daily amount, $500.
Frequently Asked Questions about Average Daily Float
1. What is "float" in finance?
Float is the temporary difference between the balance in a bank account according to the bank's records and the balance according to the account holder's records, due to outstanding checks, deposits, or other transactions that have not yet cleared.
2. What is Daily Float?
Daily float is the specific amount of funds that are considered "in transit" or uncleared on a given day. It's the funds that have been sent or received but are not yet settled and available.
3. Why calculate the Average Daily Float?
Calculating the average provides a typical figure for the amount of funds tied up in transit over a period, which is useful for cash flow forecasting, liquidity management, and evaluating payment processing efficiency.
4. How do I use this calculator?
Enter the daily float amount for each day you want to include in the average. You can type them all in the box, separated by commas, spaces, or new lines. Then click "Calculate".
5. What happens if I enter non-numeric text?
The calculator attempts to extract valid numbers. Non-numeric entries or empty entries between separators will be ignored. An error will be shown if no valid numbers are found.
6. Do I need to enter negative numbers?
Float amounts are typically non-negative. While the calculator can technically average negative numbers if entered, in a standard financial context, you would enter zero for days with no float or only positive float amounts.
7. What unit does the result have?
The result will be in the same unit as the daily float amounts you entered (e.g., if you entered dollars, the result is in dollars).
8. Can I use this for different types of float?
Yes, you can use it for collection float (from incoming payments), disbursement float (from outgoing payments), or presentment float (time from when a check is presented to the bank until it clears).
9. What does a high Average Daily Float indicate?
A high average daily float can indicate significant time lags in receiving or clearing payments. For collection float, reducing it means funds become available faster. For disbursement float, a longer float means funds stay in your account longer (though this must be managed carefully for relationships and ethics).
10. Is average daily float the same as average ledger balance?
No. The ledger balance is the total balance in the account according to the bank's records. The average daily float is specifically the portion of the ledger balance that is not yet available for use (or the negative of it if tracking funds leaving your account).
