Float (payments)
Float in payments is money that has left one account but is not yet usable in another. It also means customer cash a payment firm holds during that delay, measured in days or currency.
How it works
Float arises from timing gaps in a payment chain. Card settlement, bank transfers and cheque clearing all create delays between debit and credit. The Association of Corporate Treasurers describes payment float as the interval from invoice receipt until the payer's account is debited. It notes float can also be expressed as a cash amount.
For a cross-border payment company, float runs in both directions. Customer funds may arrive days after the firm has already paid the recipient. Remitly discloses a practice of paying recipients before customer funds are actually received. That gap is a receivable the firm must finance from its own liquidity.
Customer money held in transit is generally kept apart from the firm's own funds. In regulated markets it may fall under safeguarding or permissible-investment rules. Treating customer float as free working capital is a frequent and serious error.
Example
Illustrative example: A firm collects $500,000 a day by card, which reaches its bank two business days later. It pays recipients the same day. At any point about $1,000,000 of payouts have been made before the matching card funds arrive. Treasury must finance that $1,000,000 from its own cash or credit lines.
Frequently asked questions
Is float an asset or a liability?
It depends on direction. Funds received but not yet paid out are usually owed to customers. Funds paid out but not yet collected are a receivable you have financed. Track the two separately.
Can we earn interest on customer float?
Sometimes, within limits. UK relevant funds may be invested only in approved secure, liquid assets. US money transmitters must hold permissible investments covering outstanding obligations. Check the rules in each licensing jurisdiction.
Related terms
Sources
- What is cash float? · Modern Treasury
- Payment float · ACT Wiki, Association of Corporate Treasurers
- Remitly Global, Inc. Form 10-K for fiscal year 2024 · U.S. Securities and Exchange Commission (EDGAR)
- The Payment Services Regulations 2017, regulation 23 (Safeguarding requirements) · legislation.gov.uk (The National Archives)
Know where all your money is.
Polynopsis gives cross-border payment teams one live position across every bank, payout partner, exchange and wallet, including money in flight, and warns before a corridor runs dry.