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Disbursements |
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Disbursements are defined simply as the payments made by a corporation. These payments include payroll, dividends paid to shareholders, trade payables (payments made to suppliers of goods and services), as well as other miscellaneous payments. The company making the disbursements has some control of how and when payments are made. The paying company ("payor") may usually select the payment media used (cash, check, ACH, wire, etc.) and, to a reasonable degree, the timing of the payment. This section will focus on check disbursements. Combating Fraud on Corporate Checking Accounts (White Paper from Bank of America). Service Provider Listing Request Individual provider Performance Results from the Phoenix-Hecht Clearing Study™ The average clearing time for a given set of disbursement checks will vary depending on the bank on which they are drawn. This statement is based both on empirical tests and on the understanding of how deposited checks of various sizes are handled by banks. This differential clearing speed enables treasury managers to select disbursement bank sites that will generate greater (or lesser) amounts of disbursement float. Latest Clearing Study™ Highlights Methodology used to conduct the Phoenix-Hecht Clearing Study™ Using the Clearing Study™ Data The most accurate and powerful way to use the check clearing data is to combine it with information about where your disbursement checks are deposited (data from your accounts payable system). Companies usually have hundreds of suppliers. However, in many cases, most of the disbursement dollars go to a limited number of key suppliers. In these cases, not all suppliers need to be included in the analysis; only enough to get 80 to 90% of the total percentage of dollars included.
Controlled Disbursement services are utilized by a high percentage of corporate treasury managers. The pricing for disbursement services is very competitive. Large discounts from the list price are typically granted for even medium volumes.
Blue Book of Bank Prices Executive Summary Quality Trends The Phoenix-Hecht Quality Index™ is a statistically valid comparison of customer perceptions about bank performance. The Index rates two perceptions of the Controlled Disbursement product. Individual bank Quality Index™ measures must be requested directly from surveyed banks.
Business-to-Business Payment Options The Business-to-Business Task Force under the guidance of NACHA's Council for Electronic Billing and Payment produced this 60+ page paper that documents the payment options that can be incorporated into EIPP (Electronic Invoice Presentment and Payment). Standardized RFPs: Effective Tools for Selecting Cash Management Banks is published by AFP and BAI. It includes RFPs for controlled disbursement, depository services, wholesale lockbox, wire transfer, automated clearing house (ACH), electronic data interchange (EDI) and information reporting. Cost $75-$100. Check collection Over 270 million checks are created on an average business day, distributed to the payee (the U.S. Postal Service is a major factor in the payor-to-payee logistics), and eventually deposited. Once deposited, the checks are in the check clearing system and only two steps remain . (1) to get these pieces of paper returned to the financial institution on which they are drawn, and (2) move the value indicated on the check in the opposite direction (from the payor's account to the depositor's account. All of this movement of funds and paper is done quickly and inexpensively.
CLEARINGHOUSE - An organization made up of local banks established to exchange ("clear") checks drawn upon other member banks. Typically, the major banks in a city or town establish a clearinghouse to facilitate the orderly exchange of checks they have received in deposits and to settle the net value calculated from the check exchanges. Bank members of clearinghouses often maintain checking accounts at the other member banks.
Check Fraud
Liability for check fraud rests on both banks and check issuers. The fraud loss will more often be borne by the party in the best position to have prevented the fraud. If you discover you have been a victim of check fraud there are no simple, foolproof solutions for dealing with the situation. The first step should be to review your options with your bank. For the protection against fraud you should purchase such bank services as positive pay, electronic reporting of checks-paid information, account reconcilement services, and conduct a physical review of paid items on a daily basis. Treasury Managers should be familiar with the Uniform Commercial Code (UCC) Article 3, Negotiable Instruments and Article 4, Bank Deposits and Collections. CHECK FRAUD: A GUIDE TO AVOIDING LOSSES from the Comptroller of the Currency describes common check fraud schemes and presents tactics banks and their customers can use to combat check fraud. Indexed PDF file 23 pages. Positive Pay as a fraud loss deterrent A Positive Pay service should be purchased for every disbursement account. When checks are printed the check generation software creates a positive pay file. The file contains information such as check number, date, amount, and payee. This file is then transmitted to your bank. When a check is presented at your bank for payment, the bank first checks your Positive Pay transmissions to see if the check is valid. Only if the Positive Pay transmission matches the check details will the check be honored. The bank rejects:
Check Imaging Electronic imaging makes it possible to replace paper paid items with an accurate electronic representation and then store, retrieve, display, print and distribute the electronic image. Image Delivery Systems consist of image-based document processing products used to convert paper documents into digital images that can be stored, retrieved and delivered in a variety of manners. Images can be delivered to bank customers on CD-ROM media, faxed to customer locations, or displayed on PC's.
Reconcilement This service aids you in the reconcilement of disbursement accounts by providing a list of all the checks paid during a given statement period. Additional detail on outstanding checks and exception items is available when you provide the bank with check issue information. Integrated Disbursements
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