Cash management services

Type :

Term papers

Pages :

19 pages

Format :

.doc

Published date :

04/08/2009

Category :

Economics & finance

Sub category :

Finance

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Summary :

Introduction
Typical trade cycle
Traditional collection mechanism
1. Importance of cash management for a corporate entity
2. Importance of fee-based services segment to banks
3. How corporates select a bank for sourcing cash management services ?
4. A framework to provide effective cash management services
5. Limitations of the services
6. Types of cash management services
Cash management products
Salient features of CMS
Benefits to the customer
1. Local cheque collection service
2. Operational procedure
3. In respect of returned instruments
4. Pooling of collected funds
5. Important guidelines for Local Cheque Collection (LCC) service to be observed by the operating branches
6. Deposit Slip (DS)
7. Clearing presentation and returns - Accounting
8. Confirmation of transactions
9. Courier management
10. System related matters
11. Reconciliation of CMS pool accounts
Payment services
1. Remote payouts
2. Case study on cash management services at a bank
Correlation with Current Account Balances
Recommendations
UCC
Conclusion

Abstract

With the growing pressure on interest spread, banks are focusing their attention on the 'fee based' services. The exponential growth in IT and Communications has helped banks in developing and delivering customer friendly products in the areas of Collections and Payments.

As we are all well aware, the fundamental objective of cash management is 'optimization of liquidity through an improved flow of funds'. In today's highly competitive environment, where time is considered as money, deployment of staff to render basic routine tasks does not make economic sense.

As a sequel, cash management today is not what it used to be. Electronic banking, which began as a passive desktop access to bank balances, is emerging into complex processes f liquidity management through numerous techniques.

Almost all of the corporations in advanced countries are now planning to use the services of banks to help them collect payments on monthly bills they issue to consumers and other types of cash management services. According to the findings of a Study conducted by Killen and Associates the top 400 Canadian enterprises can save $23 billion annually by applying emerging electronic cash management strategies. The Killen Study, states that in 2005, $300 billion worth of electronic payments will be collected over e-billing networks, which is a mammoth extension of cash management services. Commercial banks in the Western countries realized the tremendous potential in providing cash management services to vastly improve their profitability. In a report titled 'The Future of Wholesale E-Banking : The Portal' which was published by Celent Communications it was projected that by 2003, 40 per cent of the top 100 US banks will be offering advanced Internet portals to their business customers. In an urge to consolidate and expand customer relationships and to stay ahead of the competition, wholesale banks have turned to the next generation of personalized and uniform online cash management services. The ultimate cash management solution as seen by many corporate is a fully centralized management of financial and commercial payments where intra-group companies have no external bank accounts, except a local account for petty cash.