FIN4320_Lecture_9_Cash_Collections(34p)

FIN4320_Lecture_9_Cash_Collections(34p) - Cash Collections...

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1 Cash Collections
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2 Objectives Of A Collection System Mobilize Funds Access Information Update Account Receivables Support Audit Trails
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3 Collection Float Components Mail Float Processing Float Availability Or Clearing Float
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4 Collection Float Measurement Dollar-Days Dollar Amount * Calendar Days Of Float Average Daily Float Total Dollar-Days/Total Calendar Days In Period Average Daily Receipts Total Dollar Amount/Total Calendar Days In Period
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5 Collection Float Measurement Average Collection Float Total Dollar-Days/Total Dollar Amount Annual Cost Of Float Average Daily Float * Opportunity Cost Of Funds
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6 Considerations In Selecting A Collection System Payment Practices Payments System Lots Of Checks Not The Most Timely Mail System Lots Of Small Banks Lack Of Nationwide Banking (Changing) Nature Of The Business
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7 Considerations In Selecting A Collection System Payment Instrument Characteristics Cash Check Third Party Credit Cards Debit Cards ACH Wire Transfer Float/Administrative Cost Tradeoff Wholesale And Retail Payments
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8 Collection Methods Decentralized Versus Centralized System Decentralized Advantages Reduced Mail Float Reduced Availability Float Disadvantages Local Deposits May Not Be Made On Time Funds Need To Be Concentrated
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9 Collection Methods Decentralized Versus Centralized System Centralized Advantages Highly Automated More Control Over Funds Since They Are Already Centralized Disadvantages Expensive Mail And Availability Float May Not Be Minimized
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10 Collection Methods Over-The-Counter Mail Processing Company Processing Center Lockbox System
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This note was uploaded on 04/02/2009 for the course DEPARTMENT FIN 4320 taught by Professor Sherwoodbishop during the Spring '08 term at Southwestern.

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FIN4320_Lecture_9_Cash_Collections(34p) - Cash Collections...

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