Balance withheld – What it is, definition and concept

The retained balance is that amount of money in checking account already committed for a future payment. The account holder cannot dispose of said capital.

That is, the retained balance is an amount of money in a checking account that cannot be used because it will be used for a particular payment. For that reason, it is separated from the rest of the account.

In the economic day to day it is common to find situations in which a retained balance appears. Although its main nature is the security of its owner, there are other motivations for this type of banking action.

Thus, this concept is closely related to that of the bank balance and the supervision of bank accounts of both individuals and all types of organizations.

When there is an action by a bank to withhold balance, this fact means that the available balance and the actual balance do not coincide.

In other words, the actual amount of money available is less than the theoretical total.

Causes of retained balance

The appearance of a balance in retained status can be due to multiple causes. At the same time, this fact often leads to all kinds of situations: from non-payment risks to economic and legal processes.

The main reasons for withholding a bank balance are the following:

  • Acquired commitments: In most cases, the balance is withheld to cover expenses that have already been incurred, but whose payment is at a later date.
  • Irregularities in account: The detection of suspicious account behavior enables banks to safely retain their next movements.
  • New payment practices: The growth of online commerce has led to new cases of delays in payments, which respond to bank checks.
  • Deposits or garments: Economic activities such as the rental of certain goods entail the retention of the balance as a guarantee. It is also a common practice in lodging reservations.
  • Judicial motivation or cause of seizure: The action of official and legal bodies is another reason for action in bank accounts and retention of amounts determined by sentences of various kinds.
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Balance withheld in practice

At a technical level, changes in a checking account are usually not reflected instantly, with a day passing by for the new entries to be displayed.

The same thing happens with the effects of accounting records. There are future payment commitments that have not yet been really satisfied, but that involve the withholding of the amount in question to ensure its payment.

Alternatively, there are commonly debit payment operations that are not covered on the spot. In these cases, the final payment can be made after prior checks by the bank or partially on the spot.

In practice, the withheld balance changes to real availability only for two reasons: Either because the final payment date of the committed expense has arrived, or because this operation was not finally carried out as it was canceled by one of the parties.

The bank may find a fraudulent or irregular expense. Thus, a purchase can be suspended or canceled and, finally, the payment is not completed.

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