The transfer mechanism selected should be the one

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Unformatted text preview: ion account. Wire transfers are a substitute for DTC and ACH transfers, but they are more expensive. It is clear that the firm must balance the costs and benefits of concentrating cash to determine the type and timing of transfers from its lockbox and other collecting accounts to its concentration account. The transfer mechanism selected should be the one that is most profitable. (The profit per period of any transfer 624 PART 5 Short-Term Financial Decisions mechanism equals earnings on the increased availability of funds minus the cost of the transfer system.) Zero-Balance Accounts zero-balance account (ZBA) A disbursement account that always has an end-of-day balance of zero because the firm deposits money to cover checks drawn on the account only as they are presented for payment each day. Zero-balance accounts (ZBAs) are disbursement accounts that always have an end-of-day balance of zero. The purpose is to eliminate nonearning cash balances in corporate checking accounts. A ZBA works well as a...
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