Johny Fernandez: What is a daily average balance?
Sean Murray: What is a daily average balance? So this comes
up again in underwriting kind of like monthly deposits. So, a
daily average balance is a factor that underwriters use to
gauge the cash flow of a business. Because if, if the
success of the deal hinges upon pulling out a percentage of
future receivables, then they're gonna need to be able to keep
cash in the bank in order for this all to work out. And so
they're not only gonna evaluate monthly deposits, and the
frequency of deposits, but they're going to look to see how
much money ends up staying in the bank. And they're gonna look
at it on on a sort of an average daily basis. It's cause you
can't just have money in the account at the end of the month,
but nothing in there for the other 29 days, right. So they're
gonna look at look at on average, how much you keep in
the bank account. And that's going to play a factor into an
approval. Because if the if the, if the goal is to debit, say,
$1,000 per week, from the account, and the average daily
ending balance is about 50 bucks, well, there's a high
likelihood that we're gonna head into either NSFs or overdrafts
and that funder may not be able to get their money, right. And
it might be terms that are just, you know, that don't work for
the merchant. So the average daily ending balance is
something that underwriters look at to figure out whether or not
the terms of the deal are compatible with the cash flow of
the business.