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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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