Float

  1. Money in the banking system that is briefly counted twice due to delays in processing checks (e.g., when a check is showing in both the payor and recipient banks).

 

So many electronic transactions, including the sending and receiving of text messages, emails and phone calls, are processed in an instant that the concept of bank-related float seems rather antiquated. When a check is deposited, it is possible for that credit to (temporarily) simultaneously exist in both the account of the payer and the recipient. Once the check clears both accounts, the float disappears. Most occurrences of float occur due to processing delays resulting from weekend, seasonal and weather-related backlogs at processing institutions. As technological advances have impacted the banking industry, the financial impact of float has steadily declined. As check-related processing speeds up, float will likely continue to become less and less of an issue.

 

Most of the time, the only advantage to be had from the existence of float is earning a bit more interest or gaining a bit of time to resolve bookkeeping issues before a check clears. However, there are those who would manipulate float in others’ accounts in such a way that their behavior is considered mail or wire fraud. Remember the days when all “float” meant was laying on your back in a pool during the summertime? Adulting is hard.

 

  1. Used to mean the total number of shares available for trading.

When closely held shares are subtracted from the total number of shares outstanding, float is calculated. Companies are able to calculate how many shares are available for trading in any given moment by determining float.

 

EXAMPLE:

“Can I buy you a drink? It’s a holiday weekend so I have two more days to take advantage of the float affecting my bank account.”

“Umm… what?”