increase, but there is still no change in the available balances. "In general a firm's payment.
(disbursement) activities generate disbursement float, and its collection activities generate.
collection float. The net effect, that is, the sum of the total collection and disbursement.
floats, is the net float" (Jordan, 2001, p.480). Net float can be positive or negative. If the.
net float is negative, the collection float exceeds the disbursement float and the corporation.
has a net collection float. In managing float, a company wants collection faster and.
disbursement slower. A company must reduce or increase mailing time, processing delay,.
and availability delay to achieve this goal. "Float management is a continually changing,.
price-sensitive environment that requires detailed information and environment that requires.
detailed information and stringent control over float and item processing systems. To.
remain competitive and profitable, float management must optimize float allocation while.
recouping clearing float and fees" (Carreker, 2002). The changing environment of float is.
also due to EDI, electronic data interchange, which electronically transfers financial.
information and funds between parties. This eliminates paper invoices, paper checks, and.
the postal system. Dealing with this changing environment, float managers need to take.
advantage and seize the opportunity to recognize future dangers. "Understanding your.
bank's funding structure will also help you put value to the changes in negative float which.
will occur when image exchange and check truncation begin in the next few years. That.
value is critical when evaluating new paperless transactions, the loss of cash management.
revenue and potential revenue of new products" (Carreker, 2002). Cash managers must.
compute with bank cash balances, since they represent collected funds, and not the.
company book balance. Using this method, a cash manager can avoid penalty charge for.