FIN 610Lisa IodiceHomework 5 - basis and then depository...

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FIN 610 Lisa Iodice Homework 5-4 What factors determine how frequently transfers should be made from a deposit account to a concentration account? The objective of a cash concentration system is to minimize excess balances and to move funds in the most efficient way possible. This doesn’t need to be done daily but should be based on the average daily deposit size, the dollar amounts to be transferred and the compensation that would be due to the bank. What are the charges for the bank’s services? It would need to be determined if a fee-based or compensating balance structure would be more suitable. Since idle funds incur opportunity costs, if a lockbox system is used, this should be concentrated on a daily
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Unformatted text preview: basis and then depository accounts should be concentrated anywhere from one to three times per week using ACH. Cost is obviously going to be one of the main determining factors but also the funds availability timing needs to be considered as well. Modlin, S., & Stewart, L. S. M. (2012). Cash Management Practices among southeastern county governments: proper utilization or excessive caution Public Finance and Management, 12 (2), 100-119. Retrieved from ? url= Tollman, S. L. (1995). The best ways to concentrate cash. Corporate Cashflow, 16 (2), 40-42. Retrieved October 27, 2015....
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