How to Choose the Right Precision and Scale for Storing Money in Decimal Database Columns?

Precision and Scale for Storing Money in Decimal Columns: A Comprehensive Guide

When utilizing decimal columns to store financial values in a database, selecting the appropriate precision and scale is crucial. Here's a comprehensive analysis to address the concerns raised about their impact on efficiency and choosing optimal settings.

Are Decimal Columns More Efficient Than Fixed-Width Char Columns?

Contrary to the presumption, char columns do not provide superior efficiency for storing decimal values. Decimal columns offer advantages in accurately representing monetary amounts with fixed scale and precision, whereas char columns are optimized for text storage.

Choosing Precision and Scale

The recommended precision and scale settings for storing money in decimal columns depend on the specific requirements. However, DECIMAL(19, 4) is a popular choice as it aligns with the historical Currency data type in earlier Access/Jet versions. This setting offers an additional decimal place for rounding purposes, enabling custom rounding algorithms to be implemented.

Overkill or Not Enough?

DECIMAL(24, 8) is considered excessive for most currency applications. Most currencies are quoted to four or five decimal places, with some exceptions requiring pro rata adjustment. Unless you're handling astronomical sums of money, DECIMAL(19, 4) provides ample precision.

Accounting Rules and Standards

Beyond technical considerations, it's essential to consult accounting professionals or domain experts to determine if specific accounting regulations apply, such as GAAP or EU intra-state transfer rules. These regulations may mandate a particular decimal precision or scale.

Avoiding SQL Server's MONEY Data Type

The SQL Server MONEY data type should be avoided due to potential accuracy issues and limitations in portability and implementation. Aaron Bertrand's blog elaborates on these concerns.

Mathematical Basis of Banker's Rounding

Banker's rounding, implemented in decimal columns, has mathematical roots. It prioritizes minimizing the absolute round-off error, making it the preferred choice in hardware and software design.

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