Float: The difference between the cash balance on banks books and firms books due to timing.

Delay in the payment of checks

Delay in clearing of deposits

Positive: Bank Balance > Firms Balance

Negative: Bank Balance < Firms Balance

Management's Goal:

Speed collection and slow disbursements

Components of float:

Mail Float Customer to Company

Processing Float Company Records and Deposits

Check Clearing Float Deposit Clears and Available

Float can be reduced or eliminated for a cost.

Required: Float is the difference between the cash balance on the banks books and the firms books due to timing. In the past, the difference typically reflected the use of checks as a source of payment. Give an example of an electronic means of payment and its impact on float. Write at least 300 words.

Please don't copy from anywhere and write in your own words. Thank You!