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bkb1956
bkb1956, Tax Preparer
Category: Canada Tax
Satisfied Customers: 3368
Experience:  Tax preparer with 18+ years of experience
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How can i calcultate average collectable balance? I am

Customer Question

how can i calcultate average collectable balance?
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I am looking at my bank statement and my bank has a section saying average collected balance and i would like to know how did they come about that number? is there a calculator that can help me figure it out?
JA: Is there anything else the Accountant should be aware of?
Customer: just understand if i had more money in there how can i calculate apparently this is important to the banks i am trying to get loan from. ?
JA: What confuses you?
Customer: well is my account says previous bal 8,186.99
Submitted: 10 months ago.
Category: Canada Tax
Customer: replied 10 months ago.
in the month of February my ending balance was 52,163.31 how can i come up with my average collected balance for my business account. Just the formula. As in another business account i have ending balance 02/29/16 93.31 and the statement for this account says Average Collected Balance is $1870.83 I am puzzled. Would like to understand how to come up with that number for my $52,163.31 ending balance same date the formula is my goal.
Customer: replied 10 months ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 10 months ago.
Ok no one has gotten back tome with my answer.
Expert:  ABC Accounting Group replied 10 months ago.

Hi. It is the average of collected funds (less any uncleared or uncollected deposits) in a bank account over a specified period, usually one month. The average collected balance is calculated by adding the daily collected balance and dividing by the number of days in the period

Expert:  ABC Accounting Group replied 10 months ago.

Computation - add the account balance at the end of each day of the month, and then divide by the number of days.

The average balance can also be calculated - is the begining and ending balance divided by 2.

Hope this helps.

Customer: replied 10 months ago.
This is Google response I want a formula. This is a rip off.
Expert:  ABC Accounting Group replied 10 months ago.

I am opting out. Thank you for your patience.

Expert:  Rick Martin replied 10 months ago.

Hi please send me a copy of the page with all the numbers and I will give you the formula.

Expert:  bkb1956 replied 10 months ago.

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.

Please let me know if I can assist you further.

Thank you and best regards,

Barb