■ The Cash Management by banks
Also referred to as the Treasury management generally is a marketing term for the certain kind of servic related to the cash flows offerred primarily to the larger business customers.
It's specifically related to the specific activities such as cash concentration, zero balance accounting and automated clearing house facilties.
Below are the descriptions of the services offered by the banks.
a) A/C reconciliation
For prevention of the fraudulent cash activities (to check cheques on daily basis of clearance and issue of the cheques).
b) Advanced Web Services
They are log on credentials, allowing the employees to send wires and access other cash management features from the web site.
c) Armoured Car Services
There're large retailers who collect huge ash may have the bank pick up via armoured car instead of asking the company's employee to deposit the cash.
d) Automated Clearing House
Electronic systems used to t/f funds between the banks.
e) Balance Reporting
Generally, corporte clients who manage their cash usually subscribe to secure web based reporting of their A/C and transction at their lead bank. These compilations of banking may include balances in foreign currencies as well as those at the other banks.
f) Cash Concentration Services
Say, the large retailers are often in the area where their primary bank doesn't have branches. Thus, for this, they open the bnk A/C at various local level banks in that area.
To prevent the funds in those A/C fom being idle and not earning sufficient interest, many of these banks enter into the agreement with the pimary bank, whereby the primary banks uses the automated clearing houses known as Cash management services.
g) Controlled Disbursements
These are the daily reports that states the anount of disbursements that'll be charged to customer's A/C. The early knowledge of the funds requirements allows customers to invest any surplus in intraday investment opportunities typically money market investments
h) Lockbox/Wholesale services
It's often companies which relative a large number via cheques in the ma have the bank setup a post office box and deposit any cheques found.
i) Lockbox/ Reatail Services
These are for companies with small number of payments, sometimes with detailed requirement of processing.
j) Positive Pay
The comapny here electronically shares its cheques register of all writers cheques with bank and the bank thus will only pay cheques listed in that register, with exactly the same specifications are listed in the register.
k) Reverse positive pay
Similarl to the positive pay, but the process is reversed, with compay, not the bank, maintaining the list of cheques issued.
l) Sweep A/C
Under this system, excess funds from a company's bank A/C are automatically moved into a money market mutual fund overnight, and then moved back into the next morning.
m) Wire Transfer
This is carried out by simple A/C transfer or by the t/f of cash at cash office. Bank wire transfers are often the most expedient method for transferof fund between the banks.
n) Zero balance A/C
Say, companies with large numbers of stores ot locations can very often be confused if all those stores are depositing into a single bank A/C.
To see in traditional sense, it would be impossible to know which deposits were from which stores. To help to correct the problem, banks developed a system where ash store is given their own bank A/C; but all money deposited into the individual store A/C are automatically moved or swept into company's main A/C. This allows the company to look at individual statements for each store.
Thank you
Notes: Suggestions are open and are lauded.
Aditya Pokhrel
MBA, MA Economics, MPA
