Different expert here - my name is ***** ***** please allow me to provide you with additional information you will find helpful.
Knowing a formula is not enough. You need to also know your bank’s policies for treating different funds as collected, its policies for treating funds in the average daily basis because of “holds,”, as well as the laws around what must be included in the collected balance.
The Average Collected Balance is used to determine the amount of interest to be paid on a monthly balance, since UNCOLLECTED funds (money coming into the account—sometimes even posted, but not yet physically received by the bank—DO NOT EARN INTEREST.
As an example, for business accounts, the Average Collected Balance is calculated by adding the COLLECTED balance in the account) (this is something you may or may not know) for each day of the period (monthly or other applicable period) and dividing that figure by the total number of days in that period.
Please be aware of the fact that the Average Collected Balance for the period may be a negative number if the bank permits you to overdraw the Collected Balance on any day(s).
For business Accounts that are not subject to Earnings Credit, the Average Collected Balance may be calculated based on the number of days the Account was open during the relevant period.
You may not have all of the data available to make the proper calculation.
When you notice a difference, this tells you that there are funds that showed up in the average daily balance that were not considered as COLLECTED, or the funds have not yet posted. For example, a wire transfer that is not yet posted because it came in after 3:00 pm, but it is considered as collected. This is defined a little differently by each bank and subject to their specific cutoff times.
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