An adjustment that is made to the forward value of a variable to account for the timing of a payoff from a derivative contract (e.g., CMS swaps, CMT swaps, etc). In other words, a timing adjustment is needed when the payoff takes place at some time following the observation date of the underlying variable. For example, the floating rate on a CMS swap might be paid quarterly at a rate equal to the 4-year swap rate, but the rate is fixed at the fixing date, i.e., the outset of each payment period.

The timing adjustment depends proportionately on the time difference between the fixing date and the payment date, as well as on the difference in forward interest rate on these two dates.