Is Your Cash Position the Number on the Bank Statement?

A cash position is four balances: book cash, the bank’s ledger balance, the available balance and the cash that is free to spend. Holds, cut-offs, restrictions and loan covenants separate them, and money coming in waits longer than money going out. Only the smallest of the four can be spent.

The gaps come from rules that other parties own, and they can be large. Under the Federal Reserve’s Regulation CC, a $50,000 customer check deposited on Friday 2 October 2026 can leave $43,275 of it unusable for 12 calendar days (our arithmetic).

The four balances in a cash position, and what separates each from the next

Balance	Kept by	What it counts	What separates it from the next balance	Who sets that gap
Book cash	The company’s general ledger	Every receipt and payment the company has recorded, excluding restricted cash	Payments issued but not yet debited; deposits recorded but not yet credited	The company and its payees
Ledger balance	The bank	All debits and credits posted as of a date and time, held deposits included	Float on deposits; debits authorized but not yet settled	Regulation CC, the bank’s policy, processors, cut-off hours
Available balance	The bank	The ledger balance less float and pending debits	Covenant minimums; payments already promised	Lenders; the company’s own commitments
Free cash	The finance lead	Cash that can leave today without breaking a rule or a promise	Nothing: this is the floor

Source: BAI (2005) and CFPB (2022) for the bank balances; 12 CFR 229; CX Cash synthesis.

Free cash = ledger balance − float − pending debits − committed payments − covenant minimum, in unrestricted accounts, at one cut-off time

What does each balance in a cash position count?

The banks’ own reporting standard defines the middle two. BAI’s balance-reporting specification describes the ledger balance as “the result of the total debit and credit activity as of a specific date and time”, with “no indication of funds availability or usability”. The available balance is the ledger balance minus float, also called good funds (BAI, 2005). The same glossary says the ledger balance is “sometimes referred to as book, gross, or statement balance”. That label is where much of the confusion starts, because accountants use book cash for the company’s own records.

The Consumer Financial Protection Bureau described the available balance in a 2022 circular on overdraft fees. It is “generally the ledger balance plus any deposits that have not yet cleared but are made available, less any pending (i.e., authorized but not yet settled) debits” (CFPB, 2022). The bureau withdrew the circular in May 2025, but the arithmetic matches BAI’s: the ledger balance counts deposits still on hold and ignores debits still pending, and the available balance does the opposite.

Book cash differs from both, in either direction. A payment the company has recorded but the payee has not yet presented leaves the bank’s ledger higher than the books; a deposit in transit leaves it lower.

How long can a US bank hold a deposit?

Regulation CC sets the longest a US bank may hold a deposit; banks may release funds sooner. Wires and ACH credits must be available by the next business day, and the bank counts them as received only once it holds “actually and finally collected funds” (12 CFR 229.10). For checks, the first $275 a day is due the next business day and the rest of a local check by the second (12 CFR 229.12).

The exceptions decide a large deposit’s fate. Above $6,725 of checks on one banking day, the schedule stops applying, and the bank may add up to five business days for a local check (12 CFR 229.13). The $50,000 check therefore releases $275 on Monday 5 October and $6,450 on Tuesday. The remaining $43,275, or 86.6% of the check, can stay on hold until Wednesday 14 October, because Regulation CC does not count the second Monday in October as a business day. Both thresholds are indexed to inflation and rose on 1 July 2025, from $225 and $5,525 (12 CFR 229.11). A deposit made after the bank’s cut-off hour, which may be 2:00 p.m. or later, counts as made the next banking day (12 CFR 229.19).

New accounts get less. In an account’s first 30 calendar days, ordinary checks fall outside the schedules, so on our reading federal law sets no deadline for them at all. Cashier’s and government checks above $6,725 may wait until the ninth business day. A startup that opens a second bank account after a round is inside that window.

Receipts through a payment processor wait before they reach a bank at all. Stripe, for one, says a new account’s first payout typically completes within 7–14 days of its first live payment. Its standard US settlement is T+2 or slower, and ACH Debit takes 4 business days because bank payments carry “a higher risk of returns or reversals” (Stripe).

When money becomes usable, by how it arrives or leaves

Flow	When it counts	Rule or source
Wire or ACH credit received	Next business day at the latest	12 CFR 229.10(b)
Check deposits, first $275 a day	Next business day	12 CFR 229.10(c)
Local check, up to $6,725 a day	Second business day	12 CFR 229.12(b)
Check deposits above $6,725 a day	Up to 5 more business days, longer if the bank justifies it	12 CFR 229.13(b), (h)
Ordinary check, account under 30 days old	No federal deadline (our reading)	12 CFR 229.13(a)
Pending debit	Reduces the available balance at once	CFPB (2022)
Outgoing Same Day ACH	Files by 4:45 p.m. ET settle at 6:00 p.m.; later files next banking day	Nacha
Outgoing wire	Fedwire customer-transfer cut-off 6:45 p.m. ET	Federal Reserve

Source: as listed; banks may release funds sooner than Regulation CC requires.

Does money going out wait as well?

Very little. A pending debit comes off the available balance when it is authorized, before it settles. Outgoing payments settle in the operators’ windows: the last Same Day ACH window takes files until 4:45 p.m. ET (Nacha), and the Fedwire cut-off for customer transfers is 6:45 p.m. ET (Federal Reserve Financial Services). A batch that misses the last window settles the next banking day, which after a Friday is Monday.

So US rules hold money on the way in and let it go at once on the way out. That asymmetry is a policy choice. UK law requires a payee’s bank to release incoming money as soon as the bank itself is credited, and forbids dating a debit before it happens (Payment Services Regulations 2017, reg. 89).

Why do banks hold deposits before releasing them?

A bank that releases a deposit before collecting it is lending against it, and E. F. Hutton showed what that credit is worth. From 1980, some of its branches wrote checks larger than the cash they held at one bank and deposited them at another. That “gave Hutton the use of money in both accounts until the checks cleared” (Wikipedia). Spread across 400 mostly small banks, the practice ended up “gaining the use of an estimated $250 million a day without paying a penny in interest”. On 2 May 1985 the firm agreed to plead guilty to 2,000 counts of mail and wire fraud. William Safire likened its $2.75 million in fine and costs to “putting a parking ticket on the Brink’s getaway car”.

The scheme is called check kiting (Wikipedia), and Regulation CC’s exceptions sit where a kite would operate: large deposits, new accounts, repeated overdrafts, redeposited checks and doubtful checks. Even a released deposit is not final. BAI’s glossary describes an item made available “in two business days per its clearing schedule” but not treated as collected “for six days to allow for the possible return of the item”.

The depositor carries the cost of reading available as final: if a check comes back, the credit reverses and whatever was paid out of it becomes an overdraft. Overdraw on six banking days in six months, or on two by $6,725 or more, and the bank may suspend the schedules on every account for six months (12 CFR 229.13).

Does the cash on the balance sheet include money a company cannot spend?

Often, yes. Since ASU 2016-18, the statement of cash flows has had to explain the change in “the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents” (FASB, 2016). FASB added that “the amendments in this Update do not provide a definition of restricted cash or restricted cash equivalents”. The ending cash figure in an audited cash flow statement therefore includes money the company cannot spend, under a label each company draws for itself. SEC registrants must also show restricted cash separately, and Regulation S-X counts compensating balances, contracts and even “company statements of intention with regard to particular deposits” as restrictions (17 CFR 210.5-02).

Restricted cash in three filings, $ millions

Company (balance sheet date)	Cash and cash equivalents	Restricted cash	Total in the statement of cash flows	Restricted share	What is restricted
Uber (31 Dec 2025)	7,105	2,542	9,647	26.4%	Collateral for letters of credit and insurance; cash under legal or contractual restrictions
Navan (31 Jan 2025)	157.7	152.9	310.6	49.2%	Balances with payment processors for corporate-card transactions; cash at a consolidated VIE; collateral for lease letters of credit
BILL (30 Jun 2023)	1,617.2	2,607.7	4,224.8	61.7%	Mostly customers’ payments in transit, inside funds held for customers

Source: Uber 10-K, Navan S-1 and BILL 10-K. Restricted share is our arithmetic.

Uber’s note shows that even unrestricted cash is not all the company’s own: it “includes amounts collected on behalf of, but not yet remitted to Drivers and Merchants”, while card payments still at processors count as receivables. BILL holds customers’ money “from the day they are withdrawn from a payer’s account to the day the funds are credited to the receiver”. Its cash flow total was 2.6 times its own cash and cash equivalents (our arithmetic), so a runway figure built on that total would overstate the cash by the same factor.

Lenders take a further slice, at least in the two filings below. Navan’s warehouse facility, as its 2025 S-1 describes it, tests unrestricted cash against the greater of $100 million and its average monthly burn over the last three months. The $100 million alone equals 63.4% of the $157.7 million of cash and cash equivalents on its January 2025 balance sheet (our arithmetic). Before its 2019 IPO, Fastly’s senior loan required “at least $10 million in unrestricted cash with the lender or its affiliates at all times” (Fastly S-1). Cash under a covenant floor shows in the available balance, yet spending it breaches the loan.

How is free cash calculated at one cut-off time?

Every balance has to be read at the same moment, or money moving between a company’s own accounts is lost or counted twice. Suppose a $400,000 transfer from a treasury account to the operating account at another bank misses Friday’s last Same Day ACH window. It leaves on Friday and arrives on Monday. A Friday-evening total that reads the sender after the debit and the receiver before the credit loses $400,000; reading them the other way round counts it twice. Reading every balance as of one stated cut-off time, with money in transit on its own line, removes both errors.

From the statement total to free cash at a Series A startup (hypothetical), Monday 5 October 2026 at 9:00 a.m. ET, $ thousands

Step	Adjustment	Balance	What sets it
Total in the statement of cash flows		8,250.0	Includes restricted cash (ASU 2016-18)
Collateral for the office lease’s letter of credit	−150.0		Restricted cash
Cash collateral for the corporate card program	−100.0		Restricted cash
Book cash		8,000.0	The general ledger
Supplier ACH batch and landlord check, recorded but not yet debited	+135.0		The payees’ timing
Bank ledger balance		8,135.0	The bank
Hold on Friday’s $50,000 customer check, $275 released	−49.7		12 CFR 229.13(b)
Payroll provider’s ACH debit, pending	−310.0		Pending debit
Available balance		7,775.3	The bank
Supplier batch and landlord check, already promised	−135.0		The company’s commitments
Loan covenant: greater of $2.0M and three months of burn at $800k	−2,400.0		The loan agreement
Free cash		5,240.3	The finance lead

Source: hypothetical company, computed by CX Cash. The covenant copies the structure of Navan’s. A further $85k of card receipts sits at the payment processor and appears in none of the four balances.

The bank’s ledger balance, the largest of the four, exceeds free cash by $2.89 million, or 3.6 months of this company’s burn. The holds and pending debits that the available balance does show account for about $360,000 of the gap. The covenant, which no bank balance shows, accounts for $2.4 million of it.

Whose cash is it when a startup has subsidiaries?

That walk assumes one company. A group’s cash position adds up balances owned by separate companies, and banks, the FDIC and the IRS all count by legal entity. A parent can reach a subsidiary’s cash only as a loan, a dividend or a payment for goods or services.

The FDIC insures “$250,000 per depositor, per FDIC-insured bank, for each account ownership category” (FDIC). A subsidiary that is separately incorporated and run “primarily for some purpose other than to increase deposit insurance” counts as a depositor of its own, on our reading of 12 CFR 330.11 and 330.1. Sweeping its cash each night into the parent’s account at the same bank therefore shrinks the group’s cover.

The sweep is also a loan. US transfer-pricing rules cover advances between group members “whether or not evidenced by a written instrument” (26 CFR 1.482-2). If a dollar loan carries no interest, the IRS may impute it at the applicable federal rate, which for short-term loans is 4.25% in October 2026 (IRS, Rev. Rul. 2026-19). A $1.0M advance from a US parent to a foreign subsidiary, left for a year without interest, carries about $42,500 of imputed interest.

A lender may also decide where the cash sits. Sumo Logic’s 2016 agreement with Silicon Valley Bank required the group to hold “at least eighty-five percent (85%) of the dollar value” of its accounts at SVB (Sumo Logic, 2020). The Federal Reserve found such deposit requirements in SVB’s loan agreements with certain borrowers (Federal Reserve, 2023).

A hypothetical group’s cash position by owner, $ millions

Owner	Bank	Balance	FDIC cover	Parent can spend today?
Parent Inc.	Bank A, the lender	7.40	0.25	Yes, within the 85% covenant
Parent Inc.	Bank B	0.90	0.25	Yes
Services Inc. (US)	Bank A	0.50	0.25	Only as a loan, dividend or payment
UK Ltd	UK bank	0.20	None	Only as a loan, dividend or payment
Total		9.00	0.75	8.30

Source: hypothetical group; the covenant copies Sumo Logic’s, and FDIC cover assumes Services Inc. is a separate corporation in an independent activity.

Read by owner, $8.3M of the $9.0M is the parent’s to spend and only $0.75M, or 8.3%, is insured. Sweeping Services Inc. into the parent’s Bank A account each night would cut that cover to $0.50M and create a $0.50M loan to the parent that needs a rate and a document.

Is the bank’s available balance close enough?

The best case for a simpler view comes from DebtBook’s 2026 guide to cash positioning. It says the available balance “reflects what can actually be used”, calls it “the cash management truth” and treats the ledger balance as the accounting view (DebtBook, 2026). Payments data support part of this: checks, the classic source of float, fell to 4% of US noncash payments by number in 2024, from 59% in 2000 (Federal Reserve, 2025). For a company paid by card and ACH credit, hold schedules matter less every year.

DebtBook has the starting point right. The available balance is the bank’s best statement of what an account can pay today, and a daily cash position built on the ledger balance would spend held deposits.

As a stopping point, the available balance falls short. It does not know which deposits are pledged, which a covenant needs or which are already promised to suppliers, and it leaves out money still at the processor. Checks also persist where sums are large: they still carried 17% of the value of noncash payments in 2024, and the average check rose from $945 in 2000 to $2,653. A company whose larger customers pay by check meets the large-deposit exception whenever a day’s checks pass $6,725.

No bank can print a company’s cash position: free cash exists only once someone subtracts restricted cash, covenant floors and promised payments from balances read at one stated time, each assigned to the company that owns it. In the worked example, that subtraction turns a statement total of $8.25 million into $5.24 million the company can spend, and runway belongs on the smaller figure.

Sources

• BAI (2005). Cash Management Balance Reporting Specifications Version 2, Technical Reference Manual.
• BILL Holdings, Inc. (2023). Form 10-K, fiscal year ended 30 June 2023.
• Consumer Financial Protection Bureau (2022). Circular 2022-06, Unanticipated overdraft fee assessment practices, 87 FR 66935; withdrawn 12 May 2025, 90 FR 20084.
• DebtBook (2026). How to Determine Cash Position. LinkedIn, 9 March.
• Fastly, Inc. (2019). Form S-1 registration statement, filed 19 April 2019.
• Federal Deposit Insurance Corporation. Understanding Deposit Insurance.
• FDIC deposit insurance rules, 12 CFR 330.1 and 330.11, as in force on 30 September 2026.
• Federal Reserve Board (2023). Review of the Federal Reserve’s Supervision and Regulation of Silicon Valley Bank, 28 April.
• Federal Reserve Board (2025). Federal Reserve Payments Study, national payment volumes, top-line data (CY 2015–24).
• Federal Reserve Financial Services. Fedwire Funds Service and National Settlement Service Operating Hours.
• Financial Accounting Standards Board (2016). Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash.
• Internal Revenue Service (2026). Rev. Rul. 2026-19, applicable federal rates for October 2026.
• Nacha. Expanding Same Day ACH (rule effective 19 March 2021).
• Navan, Inc. (2025). Form S-1 registration statement, filed 19 September 2025.
• Payment Services Regulations 2017 (UK), SI 2017/752, regulation 89.
• Regulation CC, 12 CFR 229.2, 229.10, 229.11, 229.12, 229.13 and 229.19, as in force on 3 October 2026.
• Regulation S-X, 17 CFR 210.5-02.
• Stripe. Receive payouts (documentation).
• Sumo Logic, Inc. (2020). Loan and Security Agreement with Silicon Valley Bank dated 31 January 2016, with amendments; Exhibit 10.14 to Form S-1.
• Treasury regulations, 26 CFR 1.482-2 (loans and advances between controlled entities), as in force on 30 September 2026.
• Uber Technologies, Inc. (2026). Form 10-K, fiscal year ended 31 December 2025.
• Wikipedia. EF Hutton (including William Safire’s remark as quoted there) and Check kiting.

Deadlines, filing figures and payment statistics come from the rules, filings and reports above, as they stood on 3 October 2026, and business days follow Regulation CC’s definition. Totals, shares and day counts with no source of their own are computed from the cited rules and filings; “on our reading” marks our interpretation of a regulation, which is no substitute for legal or tax advice. The $50,000 check, the $400,000 transfer, the Series A startup in the free-cash walk, the $1.0M advance and the group in the owner table are hypothetical.