DEFINITION of 'Availability Float'

The time period between when a deposit is made and when the funds become available in an account, specifically relating to check deposits. The availability float exists because banks have to process physical checks before releasing funds, meaning that the depositor has to wait before funds appears in a bank account. Companies can reduce an availability float by moving to an electronic payment system, as this reduces the reliance on a bank's processing speed on physical checks.


The difference between the availability float and a payment float is referred to as the net float.

BREAKING DOWN 'Availability Float'

For example, a printing company has $50,000 deposited in a bank and is owed $10,000 by one of its clients. The printing company cashes the $10,000 check and adjusts its ledgers to indicate that it has $60,000. Until the deposit is complete, the printing company's bank account will still show it has $50,000 available. The $10,000 is the availability float.




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RELATED FAQS
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