What Is Average Daily Balance?
Average daily balance (ADB) refers to the sum of each day’s closing balance divided by the number of days in the statement cycle. In MCA and small business lending, it is a standard metric used to measure how consistently a business maintains liquidity.
ADB typically appears during underwriting and policy checks, where funders want to confirm that applicants meet baseline requirements for daily cash levels. Operators use it to understand whether a business has steady reserves or fluctuates near zero.
How Does Average Daily Balance Work?
Average daily balance is calculated using all daily balances from a statement.
- Balance capture: Each day’s closing balance is recorded.
- Summation: All daily balances are added together.
- Division: The sum is divided by the number of days in the cycle.
- Result: A single ADB figure is produced that represents the account’s typical balance.
In Heron, this process is automated within the scrubbing engine.
- Statement parsing: Bank statements are ingested, and daily balances are extracted line by line.
- Automated calculation: Heron computes ADB instantly for the statement period.
- Structured output: The ADB value is written into CRM fields for easy eligibility checks.
- Next action: Deals that meet minimum ADB thresholds move forward, while those that fall short are flagged or routed out of appetite.
This eliminates manual math and makes sure eligibility checks are applied consistently.
Why Is Average Daily Balance Important?
For brokers and funders, ADB is one of the most reliable measures of account health. It smooths out daily spikes and dips to show the true financial position of a business.
Heron makes ADB valuable by automating the calculation at scale. This reduces turnaround time, improves accuracy, and ensures no submission skips this essential eligibility check.
Common Use Cases
Average daily balance is applied across MCA underwriting and risk screening.
- Verifying applicants meet minimum balance thresholds.
- Comparing ADB across multiple months to assess stability.
- Screening out submissions with consistently weak balances.
- Writing ADB into CRM fields for underwriting visibility.
- Using ADB alongside NSFs and negative-day counts for risk scoring.
FAQs About Average Daily Balance
How does Heron automate average daily balance calculation?
Heron parses daily balances from bank statements and calculates the average automatically. The result is logged in the CRM, so underwriters do not have to compute it manually.
Why is average daily balance a common eligibility check?
ADB shows whether a business can consistently maintain liquidity. Funders often require a minimum balance level to make sure applicants can handle repayment.
What outputs should teams expect from average daily balance analysis?
Teams receive a single structured ADB field in the CRM, along with supporting daily balance data for audit. This makes eligibility checks quick and transparent.