If you work with financial data, you will run into the situation where you need to round calculated values to the nearest cent.
If you round up in every case, then that may work internally, but if your accounting package works otherwise (it will), and the other side of the ledger comes from somewhere other than your code, you may well have values that don’t balance exactly—which is critical for accounting purposes.
So it’s important to have these rounding algorithms in sync, or you’ll run into an angry accountant. Given the number of transactions that occur daily in most systems, this will pop up often if it doesn’t get done right.
Different Rounding Methods
There are many possible ways to calculate rounding when you have a difference of exactly $0.005. See wikipedia.
Do you round up to 1c, or down to 0c? Note that this isn’t an issue for $0.0051, which is closer to 1c. It’s only for exact amounts ending in 5 as the third significant digit.
Bankers Rounding - The Standard in Finance
Thankfully, a convention has arisen in the financial world called Bankers Rounding. This is the default rounding mode in C# for decimal, but it can be overridden by choosing a different midpoint rounding mode.
I’ve seen this done a lot, often for no good reason. 😬
How Bankers Rounding Works
Bankers Rounding rounds every amount up or down to the nearest EVEN cent.
Example 1 - Rounding Up
Consider $0.555, which has two EVEN cents on either side:
$0.54 (difference of 1.5c) → rounding down. $0.555 $0.56 (difference of 0.5c) → rounding up.
Since 0.5 < 1.5, we round up.
$0.555 → $0.56
Example 2 - Rounding Down
Consider $0.565, which also has two EVEN cents on either side:
$0.56 (difference of 0.5c) → rounding down. $0.565 $0.58 (difference of 1.5c) → rounding up.
Since 0.5 < 1.5, we round up.
$0.565 → $0.56
Best Practice: Use a Financial Math Library
To prevent issues, create an organization-wide Financial Math library that includes a rounding method like this:
public static decimal UsingBankersRoundingToNearestCent(this decimal amount)
=> Math.Round(amount, 2, MidpointRounding.ToEven);And enforce its usage across your codebase.
Even better:
- Add a linting rule to detect any usage of Math.Round() and flag it as an error.
- Require explicit overrides when necessary, ensuring no unexpected rounding bugs creep in.