Net Balance
A net balance is the final amount owed after all shared expenses, reimbursements, and payments have been considered.
Instead of tracking every individual transaction separately, a net balance shows the overall financial position between participants.
Example
Imagine three roommates:
- Alex pays £200 in shared expenses.
- Jamie pays £50.
- Sam pays £0.
After calculating everyone’s share, the system determines the final balances:
- Jamie owes Alex £50.
- Sam owes Alex £100.
The net balance simplifies the relationship by showing the final amounts required.
Why net balances are useful
Net balances help:
- Reduce unnecessary transactions.
- Simplify settlements.
- Make shared finances easier to understand.