What is float and how is it affected by the firm’s cash manager?
Float is the difference between cash as shown on the firm’s books and on its bank’s books.
If SKI collects checks in 2 days but those to whom SKI writes checks don’t process them for 6 days, then SKI will have 4 days of net float.
If a firm with 4 days of net float writes and receives $1 million of checks per day, it would be able to operate with $4 million less capital than if it had zero net float.