CH12-Disbursements, Collections, Concentration

Question 1

Commonly Outsourced Disbursement Services

Answer 1

1. Freight payments,
2. Payroll services,
3. Integrated or Comprehensive AP (one data file to the bank for all payments–global and domestic),
4. Payment factories (centralized AP that can use netting for local and cross-border payments)

Question 2

Notional pooling is accomplished by

Answer 2

making balancing entries on a set of virtual accounts with no changes to the bank accounts held by company entities.

Question 3

Two major objectives of a cash concentration system are

Answer 3

1. minimize excess bank balances

2. efficiently move the funds from deposit banks to the concentration bank

Question 4

What are the two concentration techniques employed in cash concentration structures?

Answer 4

Physical and notional pooling