Cash concentration: Difference between revisions

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Latest revision as of 21:59, 14 June 2024

Example:
You have 2 bank accounts (i.e. Bank X and Bank Y). For each of these bank accounts, you set a minimum of XXX 10,000. In the actual account, it appears X has XXX 15,000 while Bank Y has XXX 20,000. The difference XXX 5,000 (from Bank X) and XXX 10,000 (from Bank Y) will be transferred for a total of XXX 15.000 to Bank Account Z (Cash pool). This increases the possibility of using the surplus for other uses.

Cash concentration is the transfer of funds from diverse accounts into a central account to improve the efficiency of cash management. The consolidation of cash into a single account allows a company to maintain smaller cash balances overall, and to identify excess cash available for short term investments.

The cash available in different bank accounts are pooled into a master account. The advantages of cash concentration are

Cash control
Cash visibility

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+{{Original research|date=August 2023|reason=}}
+{| class="wikitable floatright" width="250"
+|- style="text-align:center;"
+! Example:
+|-
+|You have 2 bank accounts (i.e. Bank X and Bank Y). For each of these bank accounts, you set a minimum of XXX 10,000. In the actual account, it appears X has XXX 15,000 while Bank Y has XXX 20,000. The difference XXX 5,000 (from Bank X) and XXX 10,000 (from Bank Y) will be transferred for a total of XXX 15.000 to Bank Account Z (Cash pool). This increases the possibility of using the surplus for other uses.
+|}
 {{Unreferenced stub|auto=yes|date=December 2009}}
-{{Orphan|date=December 2009}}
 '''Cash concentration''' is the transfer of [[funds]] from diverse [[deposit account|account]]s into a central account to improve the efficiency of [[cash management]]. The consolidation of cash into a single account allows a company to maintain smaller cash balances overall, and to identify excess cash available for short term investments.
-The cash available in different bank accounts are pooled into a master account.The advantages of cash concentration are
-) Cash control
-) Cash visibility
+The cash available in different bank accounts are pooled into a master account. The advantages of cash concentration are
-For example, you have 2 bank accounts (i.e. Rizabank and Bank Islam). For each of these bank accounts, you set a minimum of RM10,000. In the actual account, it appears Rizabank has RM15,000 while Bank Islam has RM20,000. The difference RM5,000 (from Rizabank) and RM10,000 (from Bank Islam) will be transferred to Bank Account C. This increases the possibility of using the surplus for other uses.
+# Cash control
+# Cash visibility
-{{DEFAULTSORT:Cash Concentration}}
-[[Category:Financial terminology]]
-[[Category:Economics terminology]]
 {{Finance-stub}}
+{{DEFAULTSORT:Cash Concentration}}
+[[Category:Corporate finance]]
+[[Category:Corporate development]]
+[[Category:Cash flow]]