Truncation

Definition

Truncation has specific meanings in different contexts:

Banking: In the context of banking, truncation refers to the elimination of the service of returning canceled checks to customers. This means that instead of receiving their canceled checks along with their bank statements, customers get an electronic summary or image of the checks.
Computers: In computing, truncation refers to the process of dropping digits to the right of the decimal point. For example, the truncation of 6.45 results in 6, and the truncation of 737.984 results in 737. This is usually contrasted with rounding, where numbers might be rounded to the nearest value instead of simply removing the decimal portion.

A bank stops the physical return of canceled checks to account holders, instead providing scanned images or electronic records of the checks.
Customers receive an online summary at the end of the statement period detailing transactions instead of receiving the canceled checks in the mail.

Truncating the number 250.879 to 250.
In a database, entering a value of 123.456 and applying truncation would store it as 123, thus ignoring the decimal places.
Financial software truncating daily financial data values from 1023.78392 to 1023 for storage efficiency.

What are the benefits of truncation in banking?

Truncation in banking increases efficiency by reducing the handling and processing time of physical checks. It also saves costs related to printing, postage, and storage for both the bank and the customer.

How does truncation differ from rounding in computing?

Truncation in computing simply removes all decimals after the specified place without altering the preceding numbers. Rounding, however, adjusts the last remaining number based on the eliminated numbers (e.g., rounding 3.456 to two decimal places results in 3.46).

Can truncation cause errors in calculations?

Yes, truncation can lead to a loss of precision and may introduce errors, particularly in calculations requiring high accuracy, by consistently underrepresenting amounts.

Rounding Off: Adjusting a numerical value to the nearest predetermined point.
Decimal Places: The position of numbers to the right of the decimal point within a numerical value.
Check Imaging: The process of scanning physical checks and storing images for electronic access.

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