Average Collected Balance

Average collected balance is a monetary term that is related to the bank accounting terms. The average collected balance can be defined as the balance of the uncollected funds that is accumulated in the account of an individual or an account of a business entity over a specific period of time. The non cleared and uncollected deposits are subtracted from the average collected balance before its calculation. The average collected balance can be calculated by adding the daily collected balance from an account of the individual and the business entity and then dividing the amount with the total number of days in the specified period. Average Collected Balance = Balance collected in the account on daily basis/ Number of days in the period The major use of the average collected balance is to calculate the amount of interest that has been accumulated on the collected amount. This shows the amount of interest that has to be paid on the monthly balance. One thing must be kept in mind that the uncollected funds do not bear interest over them so they are not accumulated in average collected balance. For an individual account or the bank account on the personal level the difference between the average collected balance and the daily balance is often small and negligible however for a business entity this difference can be very large depending upon the financial status of the entity.

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