...Lockbox Industry Overview Lockbox commonly referred to Remittance Services, is a product provided by banks that processes accounts receivable, which are incoming payments to our clients for goods and services they provide. Clients include utilities, local governments, medical practices, property management firms, charities, office supply companies, and corporations of all kinds. Lockbox services contracts couriers to collect payments at the U.S. Postal Service on behalf of our corporate clients. Payments are processed in accordance with the clients instructions, deposits are made, and remittance information (invoice numbers, account numbers, etc.) are digitally captured or manually keyed. Data files are then created and sent to clients allowing for updates to their accounts receivable record. Lockbox services is categorized as a monopolistic competition since there are many buyers, products /services are diverse, service providers are price makers, and the industry is free entry and exit in this market. Bargaining Power of Buyer With Lockbox locations scattered across the United States, potential clients strategically shop the market for prices, during the third quarter since preprinted coupon/statements containing the current Lockbox provider’s information will soon be depleted; this provides the client the opportunity to have coupons/statements printed with the new Lockbox information and P.O. Box if the client decides to make a switch. Existing and potential clientele...
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...Abstract After reading the “Mr. Edens Profits from Watching His Workers Every Move” case study in our Contemporary Management textbook, our class was assigned to determine if Mr. Edens’ behavior was ethical and acceptable or unethical and unacceptable. Secondly, we needed to provide the rationale for our answers and provide examples. Mr. Edens has created a highly controlled workplace with close manager supervision and surveillance. Even though I don’t agree with this environment, I think Mr. Edens’ behavior has been ethical and acceptable. Lockbox Processing: No Place to Hide Mr. Edens’ company, Electronic Banking System Inc., specializes in “lockbox processing.” Due to the sensitive nature of this financial service, Mr. Edens has implemented many controls to monitor his employees. Workers handle thousands of dollars in checks and cash, and thus they need to be monitored closely. These controls are designed to limit theft which reassures customers that their money is safe. Managers sit at the front of the room on raised platforms; other supervisors watch employees from the rear. While some may consider this approach intrusive, these techniques exist in many workplaces today where employees come in direct contact with money. Mr. Edens’ employees work in an area called “the cage.” No talking is permitted, the windows are covered, and many common items that workers usually have at their desks are banned. Mr. Edens is able to monitor this environment with a series...
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...research on the benefits of switching to a lockbox for our invoice payments. In this memo, you will find some of the highlighted benefits that I feel will help you make your decision for me to continue with this research. A lockbox is a P.O. Box that is set up with our bank that our customers will be able to send their payments too. The bank has a machine that will open, sort and process the checks. Once the day’s checks are processed, the bank will create a file and send it to us. The Information Technology will load the file into our Oracle system and once the nightly processes run, the file will post automatically into our billing system. In my initial research of the benefits of switching to a lockbox, I have found many advantages. Switching to a lockbox could mean a reduction in costs, less errors, it would be more time efficient, and we would have an easier look up process. Switching to a lockbox could save us money by possibly reducing our head count. We have the potential to reduce our head count by two people. We could also save money because we could cut out fuel reimbursement casts. If we had a lockbox, the people at the bank process the checks, so our employees will no longer have to drive to the bank to deposit checks. This could also save us money by reducing our copying costs. We would not need to copy all the checks that were received because the check images would be housed on the bank’s lockbox website once they are processed. This...
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...with my research on the benefits of switching to a lockbox for our invoice payments. In this memo, you will find some of the highlighted benefits that I feel will help you make your decision for me to continue with this research. A lockbox is a P.O. Box that is set up with our bank that our customers will be able to send their payments too. The bank has a machine that will open, sort and process the checks. Once the day’s checks are processed, the bank will create a file and send it to us. The Information Technology will load the file into our Oracle system and once the nightly processes run, the file will post automatically into our billing system. In my initial research of the benefits of switching to a lockbox, I have found many advantages. Switching to a lockbox could mean a reduction in costs, less errors, it would be more time efficient, and we would have an easier look up process. Switching to a lockbox could save us money by possibly reducing our head count. We have the potential to reduce our head count by two people. We could also save money because we could cut out fuel reimbursement casts. If we had a lockbox, the people at the bank process the checks, so our employees will no longer have to drive to the bank to deposit checks. This could also save us money by reducing our copying costs. We would not need to copy all the checks that were received because the check images would be housed on the bank’s lockbox website once they are processed. This will also help...
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...Motives for Holding Cash John Maynard Keynes suggested three reasons for individuals to hold cash.1 Keynes labeled these motives as follows: transactions, speculative, and precautionary. Shifting the emphasis away from individuals, we can use these three categories to describe the motives for corporations to hold cash. Motives for holding cash: l Transactions motive: to meet payments, such as purchases, wages, taxes, and dividends, arising in the ordinary course of business. l Speculative motive: to take advantage of temporary opportunities, such as a sudden decline in the price of a raw material. l Precautionary motive: to maintain a safety cushion or buffer to meet unexpected cash needs. The more predictable the inflows and outflows of cash for a firm, the less cash that needs to be held for precautionary needs. Ready borrowing power to meet emergency cash drains also reduces the need for this type of cash balance. It is important to point out that not all of the firm’s needs for cash call for holding cash balances exclusively. Indeed, a portion of these needs may be met by holding marketable securities (cash-equivalent assets) and by maintaining unused borrowing capacity (e.g., bank lines of credit). For the most part, firms do not hold cash for the purpose of speculation. Consequently, we concentrate only on the transactions and precautionary motives of the firm, with these needs being met with balances held both in cash and in marketable securities...
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...Provide detailed descriptions and show all calculations used to arrive at solutions for the following questions: 1. Community Hospital has annual net patient revenues of $150 million. At the present time, payments received by the hospital are not deposited for six days on average. The hospital is exploring a lockbox arrangement that promises to cut the six days to one day. If these funds released by the lockbox arrangement can be invested at 8 percent, what will the annual savings be? Assume the bank fee will be $2,000 per month. 2. St. Luke’s Convalescent Center has $200,000 in surplus funds that it wishes to invest in marketable securities. If transaction costs to buy and sell the securities are $2,200 and the securities will be held for three months, what required annual yield must be earned before the investment makes economic sense? 3. Your firm is considering the following three alternative bank loans for $1,000,000: a) 10 percent loan paid at year end with no compensating balance b) 9 percent loan paid at year end with a 20 percent compensating balance c) 6 percent loan that is discounted with a 20 percent compensating balance requirement Assume that you would normally not carry any bank balance that would meet the 20 percent compensating balance requirement. What is the rate of annual interest on each loan? 4. An important source of temporary cash is trade credit, which does not actually bring in cash, but instead slows its outflow. Vendors often provide discounts...
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...College Athletes Should Be Compensated For many colleges and universities athletics programs are a major source of revenue for its institutions. These institutions rely on their athletes to keep the notoriety and popularity of their institutions name. Since, college’s athletes are supposed to be the best at the sports they play, why are they not being compensated? Some might say a student athlete’s scholarship for a free education is compensation enough. However, there are some that say the amount of money institutions make from its athletes is so great that student athletes should be given a kickback. Student athletes should be compensated for the time and performance they give to help their college and universities uphold their reputations. Certainly, both sides of this debate have made very compelling arguments in support of their views. There are those who believe that college athletes should be compensated somehow or be given a stipend for extra money to cover the costs or living that are not provided with their scholarships (Nocera No pg.). Most college scholarships fall on average about $3,500 short of the total cost of attending college each year (Nocera No pg.). Many student athletes come from low-income families and rely heavily on athletic scholarships to get them into a quality school (Burgett No pg.). Although student athletes are given a full scholarship to their school of choice these scholarships do not provide the money necessary for entertainment, travel expenses...
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...reports to name a few specifics. Generally, they offer payment and disbursement services, collection and deposit services, services regarding liquidity and investments, and information reporting. The most impressive feature of PNC Bank’s cash management services is the wide range of international services. Those were not noted in such a variety at any other bank (PNC, 2011). Susquehanna Bank offers collection services, concentration services, disbursement services, information reporting services, investment and loan services, and supporting services. More specifically services include but are not limited to remote deposits which allow deposit of checks without visiting a branch, lockbox services, money wiring, zero balance accounts, payroll, business check cards, and online banking. Lockbox services seem to be a very useful tool for a busy...
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...Student Company Internal Control Analysis |Process |Control Owner |Frequency |Documentation and execution |Control Review Process | 1. CASH DISBURSEMENTS |Approval of Vendor Invoices|A/P Clerk |Weekly |A/P Clerk collects vendor invoices, records |A scanned copy of the approved vendor | | |Purchasing Manager | |vendor invoices in the system, and gets vendor |invoices are kept in the system. Large | | | | |invoices approved by the Purchasing Manager |invoices are periodically reviewed, other | | | | | |invoices can be retrieved on an as needed | | | | | |basis. | |Printing Checks, Preparing |A/P Clerk |Weekly |A/P clerk prepares cash disbursement vouchers, |Treasurer reviews the cash disbursement | |Cash Disbursement Vouchers | | |which includes a copy of each approved invoice.|vouchers, and weekly check run prepared by| | | | |A/P Clerk prints the...
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...Analyzing and Developing a Successful Real Estate Information System Plan Jon A. Snyder Park University Management/Computer Information Systems IS 315 Computer Sys Analysis & Design I Annette M. Story February 27, 2012 Abstract Since information systems become more and more important in our today’s society, business firms, organizations, and individuals rely on these systems to manage their daily business and social activities. Hence, it becomes more and more important not only to support the efficient development of such systems but the modification and adaption of once deployed information systems need to be supported, too. Since complex requirements and the technical progress of computer systems lead to a high complexity of computer systems, the use of software models helps to manage system’s complexity and provides a tool for communication and documentation purposes. In particular for web-based information systems, a number of model driven approaches were developed. However, I believe that compared to the user interface layer and the persistency layer, there could be a better support of consistent approaches providing a suitable architecture for the consistent model driven development of business logic from early analysis until system maintenance. Analyzing and Developing a Successful Real Estate Information System Plan System analysis and design consists of four major phases and they are the planning phase, the analysis phase, the design phase and...
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...Additional Funds Needed (AFN) | (Assets tied to sales / Sales at past year)(Change in Sales) - (Liabilities tied to sales)(Change in Sales) - (Net Income)(Retention Ratio) | AFN for Sustainable Growth | (Assets tied to sales / Sales at past year)(Change in Sales) - (Net Income)(Retention Ratio) | APR (Calculate from EAR) | Nom ( EAR , Number of Compounding Periods) | Average collection period | 365 / Receivables Turnover | Average Daily Float | (Delay per period)(Amount of check) / Number of days per period | Basic Earning Power | EBIT / Total Assets | Beta of Stock A | Cov (A, Market) / Var (Market) | Bond Interest Rate Risk | Bond Price may rise and fall due to Market Interest rates. Longer Maturity bonds more sensitive to Interest rate changes than shorter ones | Bond Price (rises if discount rate falls) | N = years to maturity, I/R = Discount Rate, PMT = Interest payments from Bonds, FV = Principal Value ---> Calculate PV | Bond Price of Semi-Annual Bond | N = Years to Maturity * 2, I/R = Discount Rate divide by 2, PMT = Interest payments divide by 2, FV = Principal Value | Bond Reinvestment Rate Risk | When Market interest fall, income may fall. When Callable bonds are recalled or when bonds Matured, I need to reinvest the principal. But as Market Interest rate falls, my income will fall | Bond Risk | Interest Rate Risk (Short Term) & Reinvestment Rate Risk (hold to maturity) | Capital Intensity Ratio | Total Assets / Sales | Cash Coverage...
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...reduced contribution to profits form sales? (b) Should the firm tighten its credit standards? Explain your answer. Q. 1 Answer:- Existing Arrangements Proposed Arrangements Sales $ 100,000 $90,000 Variable cost 50,000 45,000 Bad Debts 5,000 1,800 Net Earnings $45,000 $43,000 The company should not tighten its credit standards because of reduced contribution margin. Q. 2 Lockbox system can shorten Orient Oil’s accounts receivable collection period by 3 days. Credit sales are $3,240,000 per year, billed on a continuous basis. The firm has other equally risky investments with a return of 15 percent. The cost of the lockbox system is $9,000 per year. (a) What amount of cash will be made available for other uses under the lockbox system? (b) What net benefit (cost) will the firm receive if it adopts the lock box system? Should it adopt the proposed lockbox system? Q. 2 Answer: - (a) Amount of cash available=$9,000 x 3 =$27,000 ($3,240,000/360=$9,000) (b) Expected earnings of funds related 27,000 x 15/100 = $4,050 The firm should not initiate lockbox system because annual cost of lockbox $9,000 is greater than potential...
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...and customer accounts. In addition, the person receiving the cash or preparing the deposit should not be responsible for recording cash transactions or preparing the bank reconciliation. To enhance controls over the cash receipt process, the following compensating controls can be utilized: • A lockbox system should be implemented to receive customer payments. • Two employees should receive and open customer payments, create a listing of customer payments and prepare the deposit. Customer Payments Received Does the employee responsible for preparing the deposit also perform any of the following duties: • Record payments • Record or authorize write-offs or adjustments to customer accounts in the accounts receivable ledger • Reconcile the bank account(s) The employee preparing the deposit should not be responsible for recording cash transactions in the accounts receivable ledger and customer accounts. In addition, the bank reconciliation should be prepared by an employee who is not involved in cash receipt or cash disbursement activities. To enhance controls over the cash receipt process, the following compensating controls can be utilized: • A lockbox system should be implemented to receive customer payments. • Two employees should receive and open customer payments, create a listing of customer payments and prepare deposits. • Daily reconciliations of cash receipts to bank deposits,...
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...Data entered onto the form electronically will become readable in a new barcode at the bottom of each page that changes as the customer enters information. This technology is very useful for the ability to quickly and accurately intake applications at the USCIS Lockbox facilities where the applications are mailed. According to the information given for lockbox, it is a secure facility used by government agencies and private organizations to facilitate the collection and deposit of fees. The Department of Treasury designated a financial agent to perform Lockbox services for USCIS. The Lockbox service provider does not approve or deny petitions or applications received. USCIS Lockbox facilities provided an overview of the 2D barcode and its underlying technology during this engagement (Nebraska,...
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...security interest in its receivables and inventory to lenders as collateral to secure the loan, which creates a borrowing base for the loan. It’s worth noting that not all receivables and inventory are eligible to constitute the borrowing base. For instance, receivables that are more than 90 days old and related party receivables would be ineligible (Robert A. Modansky, Jerome P. Massiminom).Also, dilution of receivables should be taken into consideration as the lender uses it to establish the advance rate which refers to the maximum percentage of the current borrowing base available to the borrower as a loan. In most cases, the asset-based lending will give the lender the control of the customer’s cash receipts and may require set up of a lockbox...
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