Cash concentration cash concentration the process

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ct payments as quickly as possible, because once the payment is in the mail, the funds belong to the firm, and (2) to delay making payment to suppliers, because once the payment is mailed, the funds belong to the supplier. Cash Concentration cash concentration The process used by the firm to bring lockbox and other deposits together into one bank, often called the concentration bank. depository transfer check (DTC) An unsigned check drawn on one of a firm’s bank accounts and deposited in another. ACH (automated clearinghouse) transfer Preauthorized electronic withdrawal from the payer’s account and deposit into the payee’s account via a settlement among banks by the automated clearinghouse, or ACH. Cash concentration is the process used by the firm to bring lockbox and other deposits together into one bank, often called the concentration bank. Cash concentration has three main advantages. First, it creates a large pool of funds for use in making short-term cash investments. Because there is a fixed-cost component in the transacti...
View Full Document

Ask a homework question - tutors are online