1 Describe the principal cash transfer tools 2 What are the

1. Describe the principal cash transfer tools

2. What are the advantages and disadvantages of the following cash collection systems

a) Decentralized Collection

b) Centralized Collection

c) Lockbox Collection

Solution

2.

a.)Decentralized collection systems:

Advantage - mail and availability delay is minimal.

Dis advantages -

1.) the field office may not be very efficient at depositing thechecks,

2.) the deposits may remain at the field office\'s bank account earningminimal rates of return if any.

b.) Centralized collection systems:

Advantage - A centralized collection system would generally have highspeedprocessing equipment to ensure quick depositing of checks.Also the cashmanager has more control since there are far fewer deposit accounts comparedto the decentralized alternative.

Disadvantages - mail and availability time would generally be greater than for adecentralized system.

c.) Lockbox collection system:The lockbox system is similar to the decentralized collection system in thatthere are dispersed collection sites to reduce the mail and availability delays.Itis similar to the centralized collection system in that there is enhanced corporatecontrol by having the funds deposited in the collection banks transferred on afrequent basis to a few concentration accounts at the firm\'s credit or disbursing banks.

1)An EFT is a transfer of funds through the use of an electronic terminal, a telephone, a computer, or magnetic tape. Most banks today offer these types of transfers, and most merchants accept these types of payments. The four most common type of EFTs are ATMs, point of sales, direct deposits and withdrawals, and internet payment systems.

-ATMs are machines connected online to the banks computers. The customer is issued an ATM card and a PIN number, which allows them access to their funds and to conduct business.

-Point of sale systems allow a consumer to transfer funds to pay for goods via a debit card.

-Direct deposits and withdrawals allow a bank’s customer to authorize a third partyto make deposits into the account. This could be for things like paychecks from employers, or payments from the government. It also allows customers to request the bank to make payments from the account to a third party. This can be set up at regular repeating intervals to pay for things like bills and rent.

Thanks