Cost of float calculator
The cost of float is the idle prefunded balance multiplied by your cost of capital. Enter your average prefunded balance and rate to see what idle cash costs a year, and what a smaller buffer would free up.
How the calculation works
Yearly cost equals the average prefunded balance multiplied by the annual rate. Cash freed equals the balance multiplied by the buffer reduction, and the yearly saving is the cost multiplied by the same reduction.
For example, $5,000,000 prefunded at a 4% cost of capital costs $200,000 a year. A 20% smaller buffer frees $1,000,000 and saves $40,000 a year.
Remitly reported about $219.6 million of disbursement prefunding at 30 September 2024 (Form 10-Q), which shows how large this line gets at scale. See prefunding, float and the corridor runway calculator.
Frequently asked questions
What is the cost of float?
It is the return you give up by holding cash idle in prefunded accounts instead of using it elsewhere or earning a market rate on it. Multiply the average idle balance by your cost of capital to put a yearly number on it.
Which rate should I use?
Use the rate that matches how the cash is funded: the interest rate on a credit facility if prefunding is borrowed, or the yield the cash could earn in a permitted investment if it is your own.
How do teams reduce it?
By holding smaller buffers per corridor with the same safety, which needs live balances, money in flight and holiday-aware top-up timing for every partner.
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.