Understanding how to determine when a check becomes available (ie: collected or “ usable funds”) is necessary to answer exam questions that test your knowledge of the US payments system which is covered in Essentials for Treasury Management, 2nd edition Chapter 8 (or ETM 3rd Ed. Chapter 10). What follows is a test-taking technique that you can use to quickly determine the funds availability of a check or a number of checks depending on how the question is structured. It relates the Deposit Deadline Time for a given check, as stated on the banks availability schedule, to both the checks Deposit Time and the banks Ledger Cutoff Time.

I suggest that if you get an exam question where you need to determine the availability of a deposited check or checks, that you draw this time line on your white board as follows:

Deposit Time ---------------------Deposit Deadline Time-----------------Ledger Cutoff Time

Here’s how you use it:

Use the stated availability, if the Deposit Deadline Time is between the Deposit Time and the Ledger Cutoff Time

Add 1 day to the stated availability, if the Deposit Deadline Time is not between the Deposit Time and the Ledger Cutoff Time

Here’s a couple of examples, where it is assumed that the Deposit Deadline Time is 12 noon, to receive 1 day availability, and that the Ledger Cutoff Time is 3PM:

If a check is deposited on Tuesday at 10AM, it will be available on Wednesday (the Deposit Deadline Time is between 10AM and 3PM so use the stated availability of 1 day)

If a check is deposited on Tuesday at 2PM, it is available on Thursday (the Deposit Deadline Time is not between 10AM and 3PM, so add 1 day to the stated availability)

- George Schilling, CTP