Collection float considers to the gap among the times, payment is made through the customer/debtor and the time while funds are obtainable for use in the company's bank account. In easy way, this is the amount tied up in cheques and drafts which have been sent through the customers, but has not still been converted in cash. The purposes for this kind of collection float are as:

• The time obtained in postal transmission
• The time obtained to process cheques and drafts through the company, and
• The time obtained through banks to clear the cheques.