Accounting Best Practices, Fifth Edition

6–7. Negotiate Faster Deposited-Check Availability

One of the standard tricks used by banks to create a larger store of funds that they can invest is to delay the availability of money from deposited checks. One can see delays of as long as five days for some checks, and much longer periods for checks drawn on international banks, even though the checks may have cleared much sooner. As a general rule, if checks are not clearing the bank within two days, then it is time to either negotiate with the bank to reduce the amount of float it is taking or to switch to another bank that is willing to make money available within a shorter time frame.

This option is not a realistic one for smaller businesses, since they have minimal leverage with their banks. Also, some companies that deal with many out-of-state customers will experience a much slower actual check-clearing time than those whose customers are located within the same state—this simply reflects the mechanics of the check-clearing process, and cannot be accelerated below a minimum level.

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