A value date is the date that is used to determine the value of a product or asset at the time that it is bought or sold. The term is used to refer to several different types of financial situations, with specific applications found with investments, bank transactions, and in general accounting. In each instance, the value date helps to identify a specific point in time when the value of the asset is recorded and the transaction becomes possible to complete.
In terms of banking situations, the value date normally has to do with the actual date that funds are traded and become the property of the new owner. This is often different from the transaction date, which refers to the date that the transaction is initiated. With the value date, the transaction is considered complete, and the activity is recorded in the accounting records of both the buyer and the seller.
With investing situations, the value date is less about a delivery date and more about the date that the worth or value of the asset is determined for the purposes of initiating a purchase or sale. For example, the value date in currency trading helps to fix the rate of exchange that is used as the basis for the trade. This means that if the deal is struck today and the rate of exchange takes place tomorrow, that change does not impact the transaction. A similar approach is found when determining the value date as it related to futures contracts, and various types of options on stocks or bonds.
As it relates to general accounting processes, the value date has to do with when an entry into a specific account goes into effect. This date may or may not be the actual date that a transaction occurred, although this is often the case. At other times, the date may coincide with the posting date; at other times, it may reflect the date that a transaction was initiated, or possibly the date that the transaction was completed.
In each situation, the value date is used to effectively establish a point in time where the worth or value related to the transaction is determined. Using various means to determine this date makes it possible to trade assets and conduct transactions as if assets with fixed values are involved. While policies regarding how the date is determined vary somewhat from one culture to another, the key is to make use of a uniform process in evaluating all transactions involving assets with fluctuating prices, and apply that process to each transaction that is recorded in the accounting records of the individual or company.
