What is a Float?

A float can be caused by anything that slows the check clearing process. It can either be a backlog of check received over weekends, higher seasonal volume during holidays or delays due to poor weather that affects transporting of checks.

When both banks list the checks on their books and have use of the same funds for a short period of time, a float is created. This is the time where a Reserve Bank credits a bank for depositing a check but has not yet collected funds from the bank upon which the check is drawn. One of the more effective means of reducing the amount of float in the check clearing process is the use of the imaging technology where a paper check is converted into an electronic image.