FIN4320_Lecture_10_Cash_Concentraton(44p)

FIN4320_Lecture_10_Cash_Concentraton(44p) - Cash...

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1 Cash Concentration Cash Concentration
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2 Cash Concentration Cash Concentration The Movement Of Funds From Outlying  Depository Locations To A Central  ( Concentration ) Bank Account Where  Funds Can Be Managed Efficiently
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3 Objectives Of Cash  Objectives Of Cash  Concentration Concentration Minimize Costs: Costs Arise From: Opportunity Costs Transaction Costs Administrative And Control Activities
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4 Keys To Minimizing  Keys To Minimizing  Concentration Costs Concentration Costs Simplify Cash Management Improving Controls Pooling Funds Minimizing Excess Balances  Reducing Transfer Expenses
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5 Benefits Of A Concentration  Benefits Of A Concentration  System System Economies Of Scale Enhanced Control
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6 Concentration System  Concentration System  Considerations Considerations Collection System Disbursement System Funds Transfer Alternatives
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7 Collection System Collection System Concentration Bank Over-The-Counter Bank Lockbox Electronic Payments
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8 Concentration Bank Concentration Bank Receive Deposits From Banks In The  Firm's Collection System Transfer Funds To The Firm's  Disbursement Banks Help With Short-Term Credit And  Investments Are We Fairly Compensating The  Concentration Banks? 
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9 Over-The-Counter/Field  Over-The-Counter/Field  Banking Banking Multiple Collection Points Multiple Banks Limited Need For Information Local Deposits
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10 Over-The-Counter/Field  Over-The-Counter/Field  Banking Banking Centralized If The Headquarters Initiates  The Transfer Can Be Done With The Home Office  Computers Scanning The Register Data At The  Remote Stores
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11 Over-The-Counter/Field  Over-The-Counter/Field  Banking Banking Decentralized If The Field Office Initiates  The Transfer Advantages: No Information Gathering Required At  Headquarters May Be Consistent With Overall Management Style  Of The Company Disadvantages: Headquarters Lacks Control Over Transfer  Decisions Often Have Longer Delays
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12 Lockbox Collection System: Lockbox Collection System: Limited Collection Points Relatively Few Banks Regional And Money Center Banks And  Third Party Processors Corporate Services Delayed Deposit Availability
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13 Electronic Payments Electronic Payments No Mail Float Bank Location Unimportant Few Banks
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14 Disbursement System Disbursement System Centralized Decentralized
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FIN4320_Lecture_10_Cash_Concentraton(44p) - Cash...

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