Meaning of compensating balance

com'pensating bal"ance

Pronunciation: [key]
  1. a balance wheel in a timepiece, designed to compensate for variations in tension in the hair spring caused by changes in temperature.
  2. a deposit balance that is required to be left on deposit by a company to maintain or guarantee credit.
Random House Unabridged Dictionary, Copyright © 1997, by Random House, Inc., on Infoplease.