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Financial Terms | |
Bank collection float |
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Definition of Bank collection floatBank collection floatThe time that elapses between when a check is deposited into a bank account and when the funds are available to the depositor, during which period the bank is collecting payment from the payer's bank.
Related Terms:Automated Clearing House (ACH)A collection of 32 regional electronic interbank networks used to ABM (automated banking machine)A bank machine, sometimes referred to as an automated teller machine (ATM). Agency bankA form of organization commonly used by foreign banks to enter the U.S. market. An agency Availability floatChecks deposited by a company that have not yet been cleared. availability floatChecks already deposited that have not yet been cleared. Average Collection PeriodAverage number of days necessary to receive cash for the sale of Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total ![]() BAN (Bank anticipation notes)Notes issued by states and municipalities to obtain interim financing for BankMoney in a bank cheque account, the difference between receipts and payments. Bank discount basisA convention used for quoting bids and offers for treasury bills in terms of annualized Bank draftA draft addressed to a bank. bank draftA guaranteed form of payment which is issued in amounts over $5,000. Bank for International Settlements (BIS)An international bank headquartered in Basel, Switzerland, which Bank lineLine of credit granted by a bank to a customer. Bank overdraftMoney owed to the bank in a cheque account where payments exceed receipts. Bank reconciliationThe process of taking the balances from the bank statement and the general ledger and making adjustments so that they agree. ![]() Bank reconciliationA comparison between the cash position recorded on a company’s Bank wireA computer message system linking major banks. It is used not for effecting payments, but as a Banker's acceptanceA short-term credit investment created by a non-financial firm and guaranteed by a Bankers AcceptancesA bill of exchange, or draft, drawn by the borrower for payment on a specified date, and accepted by a chartered bank. Upon acceptance, the bill becomes, in effect, a postdated certified cheque. BankruptcyState of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from bankruptcyThe reorganization or liquidation of a firm that cannot pay its debts. Bankruptcy cost viewThe argument that expected indirect and direct bankruptcy costs offset the other Bankruptcy riskThe risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk. Bankruptcy viewThe argument that expected bankruptcy costs preclude firms from being financed entirely Central BankA public agency responsible for regulating and controlling an economy's monetary and financial institutions. It is the sole money-issuing authority. Clean FloatA flexible exchange rate system in which the government does not intervene. Clearing House Interbank Payments System (CHIPS)An international wire transfer system for high-value Collection DepartmentAn internal department within a company staffed by specialists in collecting past due accounts or accounts receivable. Collection floatThe negative float that is created between the time when you deposit a check in your account Collection fractionsThe percentage of a given month's sales collected during the month of sale and each Collection policyProcedures followed by a firm in attempting to collect accounts receivables. collection policyProcedures to collect and monitor receivables. Commercial BankA privately owned, profit-seeking firm that accepts deposits and makes loans. concentration bankingSystem whereby customers make payments to a regional collection center which transfers funds to Consortium banksA merchant banking subsidiary set up by several banks that may or may not be of the Corporate processing floatThe time that elapses between receipt of payment from a customer and the Dirty floatA system of floating exchange rates in which the government occasionally intervenes to change Dirty FloatA flexible exchange rate system in which the government intervenes. Disbursement floatA decrease in book cash but no immediate change in bank cash, generated by checks Eligible bankers' acceptancesIn the BA market, an acceptance may be referred to as eligible because it is EurobankA bank that regularly accepts foreign currency denominated deposits and makes foreign currency loans. Export-Import Bank (Ex-Im Bank)The U.S. federal government agency that extends trade credits to U.S. Federal Financing BankA federal institution that lends to a wide array of federal credit agencies funds it Federal Home Loan BanksThe institutions that regulate and lend to savings and loan associations. The Federal Reserve BanksThe twelve district banks in the Federal Reserve System. FloatThe number of shares that are actively tradable in the market, excluding shares that are held by officers Floaterfloating rate bond. Floating ChargeCharge or assignment on a company's total assets as security for a loan on total assets without specifying specific assets. Floating exchange rateA country's decision to allow its currency value to freely change. The currency is not Floating Exchange RateSee flexible exchange rate. Floating Interest RateA rate that fluctuates with general market condition. Floating lienGeneral lien against a company's assets or against a particular class of assets. Floating-rate contractA guaranteed investment contract where the credit rating is tied to some variable Floating-rate note (FRN)Note whose interest payment varies with short-term interest rates. Floating-rate payerIn an interest rate swap, the counterparty who pays a rate based on a reference rate, Floating-rate preferredPreferred stock paying dividends that vary with short-term interest rates. floating-rate securitySecurity paying dividends or interest that vary with short-term interest rates. Floating supplyThe amount of securities believed to be available for immediate purchase, that is, in the Foreign banking marketThat portion of domestic bank loans supplied to foreigners for use abroad. Fractional Reserve BankingA banking system in which banks hold only a fraction of their outstanding deposits in cash or on deposit with the central bank. Free floatAn exchange rate system characterized by the absence of government intervention. Also known as In-house processing floatRefers to the time it takes the receiver of a check to process the payment and International Bank for Reconstruction and Development - IBRD or World BankInternational bank for Reconstruction and Development makes loans at nearly conventional terms to countries for projects of high International Banking Facility (IBF)International banking Facility. A branch that an American bank Inverse floating rate noteA variable rate security whose coupon rate increases as a benchmark interest rate declines. Investment bankFinancial intermediaries who perform a variety of services, including aiding in the sale of Investment BankerMiddleman between a corporation issuing new securities and the public. The middleman buys the securities issue outright and then resells it to customers. Also called an underwriter. Legal bankruptcyA legal proceeding for liquidating or reorganizing a business. Mail floatRefers to the part of the collection and disbursement process where checks are trapped in the postal system. Managed floatAlso known as "dirty" float, this is a system of floating exchange rates with central bank Merchant bankA British term for a bank that specializes not in lending out its own funds, but in providing Merchant BankA financial institution that engages in investment banking functions, such as advising clients in mergers and acquisitions, underwriting securities and taking debt or equity positions. Money center banksbanks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds. Net floatSum of disbursement float and collection float. net floatDifference between payment float and availability float. Payment floatCompany-written checks that have not yet cleared. payment floatChecks written by a company that have not yet cleared. PIBOR (Paris Interbank Offer Rate)The deposit rate on interbank transactions in the Eurocurrency market Positive floatSee:float. Prepackaged bankruptcyA bankruptcy in which a debtor and its creditors pre-negotiate a plan or Risk of CollectionChance that a borrower or trade debtor will not repay an obligation as promised. Society for Worldwide Interbank Financial Telecommunications (SWIFT)A dedicated computer network to support funds transfer messages internationally between over 900 member banks worldwide. Wholesale mortgage bankingThe purchasing of loans originated by others, with the servicing rights World BankA multilateral development finance agency created by the 1944 Bretton Woods, New World BankThe International bank for Reconstruction and Development, an international organization that provides long-term loans to developing countries to improve their infrastructure. 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