DEFINITION of 'Average Collected Balance'

The average balance of collected funds (less any uncleared or uncollected deposits) in a bank account over a specified period, usually one month. The average collected balance is calculated by adding the daily collected balance and dividing by the number of days in the period.

BREAKING DOWN 'Average Collected Balance'

The average collected balance is used to determine the amount of interest to be paid on a monthly balance, since uncollected funds do not earn interest. For most individuals, the difference between the average daily balance and average collected balance will be small, but for businesses it may be very large.

RELATED TERMS
  1. Average Collection Period

    The approximate amount of time that it takes for a business to ...
  2. Average Balance

    The balance on a loan or depositary account. A simple average ...
  3. Average Daily Balance Method

    A credit card accounting method where interest charges are based ...
  4. Uncollected Funds

    The amount of a bank deposit that comes from checks that have ...
  5. Accounts Uncollectible

    Loans, receivables or other debts that have virtually no chance ...
  6. Collection Agency

    A company hired by lenders to recover funds that are past due ...
Related Articles
  1. Small Business

    What's an Average Collection Period?

    Average collection period is an accounting term referring to the average number of days between a sale made on credit, and receipt of the payment. Businesses monitor this number to make sure ...
  2. Managing Wealth

    Should You Insure Your Collectibles?

    Insuring your valuable collectibles is just as important as insuring the rest of your home's contents.
  3. Financial Advisor

    How Are Collectibles Taxed?

    If you plan to sell collectibles, it's imperative that you know the tax implications.
  4. Personal Finance

    What is an Account Balance?

    An account balance represents the total amount of money in a financial account at any given moment.
  5. Investing

    What's an Allowance for Doubtful Accounts?

    The allowance for doubtful accounts represents the percentage of the accounts receivable the company expects to write-off as uncollectible.
  6. Personal Finance

    Debt Collection: Know Your Rights

    Learn about the debt collection process so you know how to handle it if it happens to you.
  7. Investing

    What's the Balance of Trade?

    The balance of trade is the difference between the value of all the goods and services a country exports and the goods and services it imports.
  8. Investing

    What's a Trial Balance?

    A trial balance is a worksheet listing the debit or credit balances of all the ledger accounts for an entity. Under accounting theory, the total of all the debits must equal the total of all ...
  9. Personal Finance

    How Credit Card Balance Transfers Work

    The pros and cons of credit card balance transfers.
  10. Taxes

    When You Can't Pay Uncle Sam

    If you can't pay your taxes, there are some steps you can take to protect yourself. Discover your options here.
RELATED FAQS
  1. How is cash flow affected by Average Collection Period?

    See how reducing a company's average collection period can help cash flow, and learn why collections practices are so important ... Read Answer >>
  2. Why is Average Collection Period important to a company?

    Discover why the average collection period can be a particularly important accounting ratio for a company that relies heavily ... Read Answer >>
  3. In which industries is Average Collection Period most important?

    Find out which industries are most concerned with average collection period, and how different types of companies interact ... Read Answer >>
  4. How can a creditor improve its Average Collection Period?

    Read about some of the ways that a business can improve its accounts receivable management practices to shorten its average ... Read Answer >>
  5. Which is more important to a nation's economy, the balance of trade or the balance ...

    Learn how to differentiate between the balance of trade and balance of payments for international trade and why the balance ... Read Answer >>
  6. What's the difference between a trial balance and a balance sheet?

    Discover what is included in a trial balance and a balance sheet, and learn about what sets these two accounting reports ... Read Answer >>
Trading Center