Bank Accounts

1
Bank Accounts
2
Bank AccountsAgenda

• Main duties of a bank
• Types of bank
• Types of Accounts
• Interest calculations
• Bank charges

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Main Duties of a Bank

• Handle customers business in a safe and
  professional manner
• Honour customers cheques
• Comply with any express (written) instruction
  from the customer
• Maintain secrecy about customers affairs
• Give reasonable notice to close an account

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Main Duties of a Bank

• Provide balance of account on request
• Receive customers money and cheques and credit to
  the correct account
• Repay money on demand in banking hours
• Advise customers immediately of any improper
  event affecting the account
• Exercise proper care and skill when performing
  all its duties.

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Types of Banks

• Global banks
• - full range of services
• - international capability
• Commercial banks
• - wide range of services
• - limited international capability
• Investment banks
• - arranging, originating and distributing
  debt
• and equity issues and advice
• Savings banks
• - taking deposits and making loans

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Types of Accounts

• Current account
• Deposit/savings account
• Composite account
• Money market deposit
• Overdraft
• Loan accounts
• Resident and Non-resident accounts

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Resident Non- Resident Some countries
differentiate

• So maybe
• Restrictions as to type of accounts or services
  available (China)
• Different fee structures (France)
• Movement of funds overseas or between R/NR maybe
  subject to Central Bank reporting (Germany)
• Prior approval may be needed for movements

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Bank Accounts/ServicesTo control Float

• Lockbox
• Intervention accounts
• Remote disbursement
• Controlled disbursement
• Direct collections
• - Negotiation
• - Collection

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Bank Accounts

• So why are they important?
• - paying and receiving funds
• - safe keeping
• - earning interest
• Considerations?
• - cost
• - how many
• - location
• - who with

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• Working out the
  interest due for September
• Ledger Value Debits
  Credits Cleared Number
• Date Date
  Balance of
  days
• 30.8.06 1.9.06
  700 700 Cr 7
• 8.9.06 8.9.06 1,500
  200 600 Dr 1
• 9.9.06 9.9.06 500
  1,100 Dr 3
• 10.9.06 12.9.06
  100 1,000 Dr 2
• 14.9.06 14.9.06 250
  45 1,205 Dr 7
• 21.9.06 21.9.06 400
  1,605 Dr 10

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Interest calculations 2

• No credit interest
• Debit interest at 6
• Work out the debit decimals
• 1 day _at_ 600 600
• 3 days _at_ 1,100 3,300
• 2 days _at_ 1,000 2,000
• 7 days _at_ 1,205 8,435
• 10 days _at_ 1,605 16,050
• Total 30,385
• Interest charge
  30,385 x 6.0 4.99
• 
  365

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Bank Charges

• Bankers are human and need to live but.
• - The Cash manager needs to control
• bank charges
• Factors affecting fees
• - Balances maintained
• - Turnover
• - Volume
• - Additional services

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Bank ChargesControl

• Understand charging method
• - no free services but there are hidden
• charges
• - avoid turnover charges and ad valorem
• - go for fixed or per item charge
• - identify most important items and focus on
  
• them
• - check interest rates used and calculations
• - check commission charges

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Bank chargesControl

• Review payment types and submission methods
• - maximise use of automated low-cost
• payment methods
• - repetitive wires cheaper than free form
• - straight through processing, STP. Deliver to
  
• the bank fully formatted
• - look for economies of scale
• - challenge unspecified supplementary charges
• - beware long commitments and index linked
  uplifts

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Bank Charges Control

• Review existing arrangements
• - cheques paid in promptly?
• - more efficient way of receiving funds?
• - courier?
• - payment procedures?
• - put out to tender, RFI/RFP
• Better cash management
• - Netting, Pooling, Cash concentration.