Session5 - AFP Learning System: Treasury Session 5 Module...

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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 1 AFP Learning System: Treasury Session 5 Module 3: U.S. Cash Management
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 2 Session 5, Module 3: U.S. Cash Management Chapter 8: Payment Systems Chapter 9: Cash Positioning
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 3 Chapter 8: Payment Systems— Outline Overview of Payment Methods Paper-Based Payments Electronic Payments Payment System Risk
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 4 Profile of U.S. Payments in 2000 Transaction Volume Checks 62% Credit/Debit Cards 30% ACH 8% Fedwire and CHIPS Transfers <<1% Dollar Volume Fedwire and CHIPS Transfers 89% Checks 9% ACH 1% Credit/Debit Cards <<1%
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 5 Discussion Question Answer: Communication: Transfer of instructions between the payee and payor banks through a clearing system Settlement Occurs when depository bank account is credited and drawee bank account is debited Settlement is final when a payment is unconditional and irrevocable. What are the two steps in the payment process and what do they entail?
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 6 Characteristics of Payment Systems Average Payment Size (2000) Typical Settlement Time Maximum Return Time* Return Risk Security Checks Credit and Debit Cards ACH Wire Transfers $925 $69 $1,010 $3,500,000 0 to 4 days 0 to 2 days 1 to 2 days Immediate 4 days 0 if prior authorization is obtained Debits: 2 days Credits: No returns** No returns High Moderate Moderate for debits None High Moderately high Moderate Low
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 7 Sample Business Check
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 8 The Check Clearing Process Key event is presentment—the delivery of a check to the paying bank. Value is subtracted from the bank’s account with a Federal Reserve bank (the Fed), a correspondent bank or some other clearing institution. Normally also subtracted from the payor’s account on the same business day.
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 9 Interbank Check Clearing Checks drawn on banks other than the bank of deposit Clearing channels Clearing house Federal Reserve Bank (Fed) Correspondent bank Direct send
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v1.1 © 2004 Association for Financial Professionals. All rights reserved. Session 5: Module 3, Chapter 8 - 10 Steps in the Check Clearing System
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This note was uploaded on 02/08/2011 for the course FINANCE 430 taught by Professor Richter during the Spring '11 term at Rutgers.

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Session5 - AFP Learning System: Treasury Session 5 Module...

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