What is the Value Date?

The value date is the date on which a sum of money is made available to the payee. The concept is especially important for high-speed payment transactions, such as wire transfers, where the payer and payee are trying to transfer funds as rapidly as possible. The value date concept is also important when checks are being used to transfer funds.

The Value Date in Payment Transactions

When a bank receives a deposit of checks from a payee, it will credit the payee's account with the funds represented by the checks. However, the bank has not really received the cash yet, since it must still collect the funds from the bank of the paying party. Until the bank collects the funds, it is at risk of having a negative cash flow situation if the payee uses the cash it has just received.

To avoid this risk, the bank posts the amount of the deposit with a value date that is one or more days later than the book date. This value date is the presumed date of receipt of the cash by the bank. Once the value date is reached, the payee has use of the funds. The value date may be categorized by the bank as 1-day float, 2+-day float, or some similar term. A larger bank customer may be able to negotiate the time period before the value date is reached.