Cash Transfer Methods

Module II

Berito,
Berito, Quennie
Quennie
Bernal,
Bernal, Jessamie
Jessamie
Cacho,
Cacho, Carmina
Carmina
 Check Payments
A check payment is made on a paper
document, which has traditionally been
physically routed from the payer to the
payee, to the payee’s bank, and then back to
the payer’s bank.
 Check Process Flow
Check is Payer’s bank
Payee’s bank
Payee transmitted transfer cash Payer’s bank
sets value Payer’s bank
Payee records to payers to payee’s credit
Payer issues date for debits
check receives check and bank bank payee’s
entry in payer’s
check deposits at through through account on
payee’s bank account
bank settlement settlement value date
balance
system system
Mechanics of Check Payment

Processing Presentation Availability

Mail float
Float Float Float
 CHECK PAYMENTS
THROUGH A LOCK BOX
Remote Deposit Remote
A company can have Capture Disbursement
it’s bank receive and
• Allows a A float concept can
process checks on its company to also be applied to a
behalf, which is avoid the company’s
termed a lockbox physical payments. The key
service. movement area that can be
of received lengthened is the
checks to its presentation float.
bank.
 Wire Transfer
A wire transfer is a way of sending funds to the
recipient’s bank account more easily than any
other form of payment, and is mostly used in
international payment.
 The following information are
needed in wire transfer:
The following information are needed in
1
wire transfer:
2 Recipient’s name and account number
Recipient bank’s name and bank
3
identification number
4 Amount of the payment
How does wire transfer work?
What is ACH Payments
The ACH is an electronic network for the
processing of both credit and debit transactions
especially in the United States and Canada. ACH
payments include:

• direct deposit payroll,

• Social Security payments,
• tax refunds,
• bills
What is ACH Payments
ACH Debits Global
ACH Payments

The existing global ACH payment system is not

perfect. Here are two limitations that are of
particular concern:

• Limited coverage.
• Limited remittance information.
Letters of Credit
 Procurement Cards
It is a type o company charge card used in
making smaller purchases for greater cost
efficiency, control and convenience. It is also
known as purchasing cards and PCards.
 System of Managing
Procurement Cards
ItIt is
is important
important to
to The
The employees
employees cancan
understand
understand how
how simply
simply charge
charge the
the
they
they can can be
be used
used items
items to
to their
their
by
by aa company.
company. pcards.
pcards.

The
The employees
employees are
are
ItIt is
is use
use aa
expected
expected to
to follow
follow
replace
replace checks
checks to
to
the
the companies
companies
make
make payments.
payments.
policies.
policies.
Advantages of P-card
1 Information

2 Convenience

3 Efficiency

4 Rebates
 Cash Payments
It is a bills or coins paid by the recipient of
goods or services by the provider. It can also
involve a payment within a business to
employees.
Advantages of Cash Payments

No Security
1
breaches

2 No overspending

3 Less Marketing
 Fees for Cash Transfers
The fees charged by the banks vary
considerably for different types of cash
transfers.
 Cash Transfer Methods
ADVANTAGES DISADVATAGES PRIMARY USE

Automated Clearing Assured delivery on

House Debit scheduled date Risk of fraud Recurring payments

Requires setup, so not

Automated Clearing Low cost and efficient
as efficient for one- Corporate payables
House payment processing time pays.

Payment requires time

Bank check Less efficient process Corporate payables
to clear.

Low cost and fast cash Payments between

Book transfer accounts at the same
transfer
bank
Requires strong
Cash controls and expensive Retail sales
to handle
 Cash Transfer Methods
ADVANTAGES DISADVATAGES PRIMARY USE

Timing is under the

Payment may not clear
Company check control of the payer and has a less efficient Corporate payables
and the payer takes
process.
advantage of float.

Administratively International
Letter of credit Secure for the seller
tedious payments

Consolidate small Significant fee for cash

Procurement card Retail and small sales
billings recipient

Can experience delays Large one time

Relatively fast and in some countries and payments that are
Wire transfer
assured delivery it requires more required on short
manual processing. notice.
Controls for check Payments

The following controls should be used to create and monitor check payments:
Controls for Remote Deposit
Capture
Controls are needed in converting the checks to an electronic format
 Controls for Electronic
Payment
The controls for electronic payments:
The following controls address these additional issues in electronic
payments such as unauthorized account debits and potentially
incorrect or fraudulent payments.
Controls for Letter of Credit
The following controls should be implemented prior to finalizing a letter of credit:
The following controls involves the creation of the seller’s invoice to
the buyer, to ensure that it will be acceptable to the bank:
Thank You
Any Questions ?