Some organizations have a problem with check fraud, whereby checks are presented to the bank for payment that either were not issued by the company or were issued for a lesser amount than is noted on the presented checks. Though not normally a major problem, some companies can lose a considerable amount
of money to fraudulent activities by this means. …read full articles of "6–7 IMPLEMENT POSITIVE PAY AND REVERSE POSITIVE PAY SYSTEM"

The person who is in charge of managing corporate cash flows is always trying to find ways to retain cash legitimately for as long as possible, to invest it, thereby earning interest for a company. There are unethical ways of doing so, such as not paying suppliers even when previously agreed-upon pay dates have been surpassed. However, these activities can destroy a company’s reputation with its suppliers and even impact its credit rating. …read full articles of "6–6 IMPLEMENT CONTROLLED DISBURSEMENTS"

Perhaps the greatest cash management problem, especially for a company with many locations, is what to do with a multitude of bank accounts. When trying to find a way to invest excess funds most efficiently, it is necessary to call all banks with which a company has an account, check on the balance in each account,
determine how much of that amount can be safely extracted for investments without increasing the risk of having a presented check bounce due to a lack of funds, shift the excess funds to a central account, and finally invest it in an interest-bearing account of some kind. To conduct this much work every day may take up all of the time of several people, depending on the number and location of accounts. A tedious chore indeed, and one that may take up the largest proportion of the cash management staff’s time. …read full articles of "6–5 IMPLEMENT AREA-CONCENTRATION BANKING"

Perhaps the single most tedious part of updating a budget is altering the myriad expense line items every time someone makes a change to the estimated revenue level. Revenue is far and away the most commonly tweaked number in a budget, so the underlying expenses have to be recast to be in proportion to the changed revenue levels a multitude of times. This is a major chore not only for the accounting staff maintaining the budget, but also for those managers who must be contacted about changes to the expense levels they had previously authorized. …read full articles of "5–11 USE FLEX BUDGETING"

A time-consuming chore at the beginning of each month is to complete reconciliations between the bank statements for all the company’s bank accounts and the book balances it maintains for each of those accounts. For example, a retail store operation may have a separate bank account for each of hundreds of locations, each of which must be reconciled. Also, if it is the controller’s policy to wait for all bank accounts to be reconciled before issuing financial statements, this can be the primary bottleneck operation that keeps financial statements from being issued in a timely manner. Finally, having many bank accounts raises …read full articles of "6–4 CONSOLIDATE BANK ACCOUNTS"

An additional issue is the number of lockboxes that should be used. A company cannot maintain an infinite number of them, since each one has a fixed cost that can add up. Instead, a common approach is to periodically hire a consultant, sometimes provided by a bank, who analyzes the locations and average sales to all customers, calculates the average mail float for each one, and offsets this information with the cost of putting lockboxes in specific locations. The result of this analysis will be a cost-benefit calculation that trades off excessive mail float against the cost of additional lockboxes to arrive at the most profitable mix of lockbox locations. …read full articles of "6–3 COLLECT RECEIVABLES THROUGH LOCKBOXES (2)"

Mostly people who have been married will soon plan to have babies. Babies are not only the proof of love between father and mother, but they are also the relationship bonding which often make marriage life to be everlasting. But soon after a family has a new baby born, all of a sudden life is going totally different. Parents should be ready mentally and financially to fulfill their babies need to grow up well. …read full articles of "COOL STUFFS FOR YOUR BABIES"

There are a number of problems associated with receiving all customer payments at a company location. For example, checks can be lost or delayed in the mailroom, given to the wrong accounting person for further processing, or delayed in transit from the company to the bank. It is also necessary for the mailroom staff to log in all received checks, which are later compared to the deposit slip sent out by the accounting staff to ensure that all received checks have been deposited—this is a nonvalue-added step, though it is necessary to provide some control over received checks. All these steps are needed if checks are received and processed directly by a company. …read full articles of "6–3 COLLECT RECEIVABLES THROUGH LOCKBOXES"

If the accounting staff needs to know the current balance outstanding on a loan, savings, or checking account, the most common way to find out is to call the company’s bank representative. This is a slow and sometimes inaccurate approach, since the representative may not be available or will misread the information appearing on the screen. More progressive companies have purchased software from their banks that allows them to dial into the bank database to view this information directly. While this is a reasonable approach, there is a cost associated with the modem and software, and there is also a time delay while the modem connects to the bank’s database. Also, much of this software is relatively primitive and is character-based, rather than graphics-based. …read full articles of "6–1 ACCESS BANK ACCOUNT INFORMATION ON THE INTERNET"

When there is a sudden influx of checks, the accounting staff may require an extra day to post them all against the accounts receivable database. This delay can also occur when the payments being made are slightly different from the invoices that they are paying, which requires some delay while the differences are
reconciled. Though these problems can create a real bottleneck in the accounting department, they also result in a lengthening of the time interval before the checks are deposited at the bank, which in turn results in lost investment income. …read full articles of "6–2 AVOID DELAYS IN CHECK POSTING"