DEFINITION of 'Remittance Float'

Remittance float is the time it takes for a payment to be sent from the remitter (payer) to the recipient and become liquid again. A submitted payment will take time to reach the recipient, then the payment must be processed by the recipient's financial institution before the recipient can use it. This term applies to all forms of payment, whether it's a check sent through the mail, an electronic payment or a wire transfer. Most of the remittance float is made up of the transit or mail time.

A remittance float is sometimes referred to as a "mail float."

 

BREAKING DOWN 'Remittance Float'

Remittance float is the time it takes for a recipient to receive and be able to use a payment once the payer has sent it. Remittance is another word for a debt owed. Managing the remittance float is a major treasury concern for both small and large businesses. Depending on the type of business and the billing schedules there may be large amounts of cash that flow into the business at certain times of the year. Because sizable interest can be earned on these receivables, companies are always looking at ways to limit the remittance float and speed up the time it takes to receive payments, clear checks, and invest or use the proceeds.

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