Ledger Balance Vs. Available Balance: A Guide to Reading Your Bank Balance

Ledger Balance Vs. Available Balance

If you deal with finance at all, you’ve probably heard words like ledger balance and available balance. Because banks use different terms to present the balance in your account, it can be confusing to determine what exactly your bank balance is.

That makes us ask, what is ledger balance? How does it differ from available balance? Additionally, which balance should you focus on to find out your bank account status?

Let’s explore.

What is Ledger Balance?

Ledger balance is simply the opening balance of your bank account. It is the amount that your account has at the start of the day. Therefore, the ledger balance doesn’t reflect the transactions that happen during the day.

Your bank will calculate the daily transactions at the end of the day and update your ledger balance for the next day.

Some banks also refer to the ledger balance as the current balance. It helps them determine things like if the customer has maintained the minimum balance.

What is Available Balance?

Available balance is the real-time balance of your bank account. It presents the balance available in your account at the present moment.

Banks work out available balance generally in two ways:

  1. Your ledger balance +/- any debit or credit till the moment you check your balance
  2. Your ledger balance minus any deposits or checks that aren’t processed yet

Your available balance indicates the total funds you can withdraw at any moment.

Ledger Balance vs Available Balance

You can come across two different balances while checking your account balance. Additionally, the figures of your ledger balance may be different from your available balance. Why?

As noted earlier, the ledger balance is the opening balance of your account of the day. It doesn’t take into account any transactions that happen during the day.

As a result, your available balance may differ from your ledger balance, which shows the figures at the day’s start.

We will take an example to illustrate the point. Let’s say you make a payment of $500 from your bank account at 12 pm. Then you log into your net banking to check your account balance.

However, you see your ledger balance shows $5,000, while your available balance is $4,500.

What is the reason for the discrepancy?

As you know, the ledger balance denotes your account’s balance at the start of the day. As a result, it will not reflect the $500 payment you made at 12 pm. It shows a balance of $5,000, which you had at the day’s start.

On the other hand, your available balance shows the real-time balance of your account. Therefore, it will take the payment of $500 into account and then show your balance.

Similarly, your ledger balance will also not include any checks deposited into your account during the day. You will only see the change once your bank receives the money from the payer and processes it to your account.

The same is also true for any check you write. The change will not reflect on your ledger balance. In fact, it will reflect on your balance only when your bank processes the check.

What about Bank Statements?

Bank statements present your transactions and balance up to a certain date. You may receive statements from your bank quarterly or on-demand.

Keep in mind that your bank statement may also not reflect the latest balance. It will exclude any debits and credits after the date written on the statement.

Therefore, your bank statement also presents the ledger balance on the statement date.

Ledger Balance vs. Available Balance: What To Focus On

Everyone should try to work with the most recent balance for accurate outcomes. You can track your available balance or keep a record of your transactions. Businesses should take a professional approach and use technology to stay updated.

They can use virtual cards that provide real-time details of each transaction. Additionally, entrepreneurs can use expense management software to track business spending.

Final Thoughts

Ledger balance is the balance of your bank account at the beginning of the day. The available balance presents the actual balance in real-time. It reflects the debits and credits from your account and presents the total funds available for withdrawal. However, both balances exclude outstanding checks pending at the moment.


What is ledger balance?

Ledger balance is the opening balance of your bank account at the start of the day. It doesn’t include transactions that happen during the day.

What is available balance?

Available balance is the real-time balance of your bank account, showing the funds available for withdrawal at the present moment.

How are ledger balance and available balance different?

Ledger balance shows the balance at the day’s start and doesn’t consider transactions during the day, while available balance reflects real-time debits and credits.

Why might ledger balance differ from available balance?

Ledger balance doesn’t include recent transactions, such as payments or checks, while available balance takes them into account.

What does a bank statement show?

A bank statement presents transactions and balance up to a specific date, but it may not include the most recent transactions.

What should individuals focus on, ledger balance or available balance?

To have accurate information, individuals should focus on their available balance for real-time updates.

How can businesses stay updated on their finances?

Businesses can use virtual cards and expense management software to track transactions and manage spending effectively.

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