Settlement balances and the float
Due from schemes, due to merchants, the float.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: settlement balances and the float.Updated 30 October 2026
Part of technology company financial models, with the models, labs and guides around it.
What it does
The money in transit. The card schemes pay the company the TPV less interchange and scheme fees a day or so after each payment; the company pays its merchants the TPV less its gross receipts a day or two later. Each balance rolls forward as opening plus amounts due less amounts settled, and what sits between them is a float of merchants’ money held in segregated accounts. It earns interest for the company, but it is not the company’s cash: it is kept out of corporate cash, free cash flow and the equity bridge.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 72–74: Days in the year, Days until the card schemes pay the company, Days until the company pays its merchants
- Settlement, rows 6–7: Due from card schemes, Due to merchants
- Settlement, rows 10–16: Receivable from card schemes, closing, Payable to merchants, closing, Received from card schemes, Paid to merchants…
- Settlement, rows 19–21: Average settlement cash, Float, Interest earned on the float
- Reported, rows 78–85: Cash and cash equivalents, Receivables from merchants and financial institutions, Payables to merchants and financial institutions, Of which cash held at central banks…
- Derived, rows 113–123: Merchant balances held, net: payables less receivables to merchants and financial institutions, Own cash: cash less merchant balances held, Merchant balances held, % of a year’s processed volume, Average cash and cash equivalents…
- P&L & Cash Flow, rows 61–72: Merchant balances held, net, Own cash, opening, Finance income, Of which on own cash…
What a reviewer looks for
- Settlement cash added to the company’s cash in the equity bridge.
- Float interest buried in revenue without a line of its own.
- Balances that do not roll forward from the amounts settled.
Learn it, then build it
Vocabulary: Negative Working Capital.