Lockbox System Advantage Receive remittances sooner which reduces processing float Disadvantage Cost of creating and maintaining a lockboX system. Generally, not advantageous for small remittances 9-16
9-16 Lockbox System Advantage Receive remittances sooner which reduces processing float. Disadvantage Cost of creating and maintaining a lockbox system. Generally, not advantageous for small remittances
Concentration Banking Cash Concentration The movement of cash from lockbox or field banks into the firm's central cash pool residing in a concentration bank. Compensating Balance Non-interest-bearing demand deposits maintained by a firm to compensate a bank for services provided, credit lines, or loans 9-17
9-17 Concentration Banking Cash Concentration The movement of cash from lockbox or field banks into the firm’s central cash pool residing in a concentration bank. Compensating Balance Non-interest-bearing demand deposits maintained by a firm to compensate a bank for services provided, credit lines, or loans
Concentration Banking Moving cash balances to a central location Improves control over inflows and outflows of corporate cash Reduces idle cash balances to a minimum. Allows for more effective investments by pooling excess cash balances. 9-18
9-18 Concentration Banking Improves control over inflows and outflows of corporate cash. Reduces idle cash balances to a minimum. Allows for more effective investments by pooling excess cash balances. Moving cash balances to a central location: