Treasury Operations and Banking Relations Flashcards
7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Treasury Operations and Banking Relations flashcards as text
What does the term 'bank float' refer to in treasury management?
Answer: The difference between the company's book balance and the bank's ledger balance caused by checks in transit
Bank float (or disbursement float) is the difference between the company's book balance and the bank's ledger balance, arising from checks issued but not yet presented and cleared.
A company wants to accelerate collections from retail customers who pay by check. Which combination of services provides the greatest reduction in total float?
Answer: ACH conversion of checks at the point of sale (ARC/POP entries)
Converting paper checks to ACH at the point of purchase (POP) or at the lockbox (ARC) eliminates mail float and availability float by replacing slow check clearing with faster ACH settlement.
Under the Check 21 Act (Check Clearing for the 21st Century Act), what is a 'substitute check'?
Answer: A paper reproduction of a digital check image that is the legal equivalent of the original check
Check 21 allows banks to create substitute checks—paper printouts of electronic check images—that are legally equivalent to the original checks for all purposes.
A multinational company faces a situation where a foreign subsidiary has excess cash in a country with capital controls restricting repatriation. Which treasury technique could help utilize those trapped funds?
Answer: Internal lending—where the subsidiary lends to related entities in the same country
When capital controls prevent repatriation, internal lending within the restricted country allows excess funds to be deployed productively to sister entities operating locally.
What is the purpose of an 'ACH debit filter' or 'debit block' service offered by banks?
Answer: To block all ACH debit entries from posting unless they match a pre-approved company ID list
An ACH debit block or filter allows only pre-authorized company IDs to initiate debits against a designated account, preventing unauthorized ACH withdrawals.
In negotiating bank fees, a treasury manager discovers the company is paying for 'maintenance fees' on dormant accounts no longer in use. What is the best course of action?
Answer: Close the dormant accounts and consolidate to rationalize the bank account structure
Dormant accounts with no operational purpose should be closed to eliminate unnecessary fees and reduce the complexity and risk of the banking structure.
Which regulatory requirement mandates that U.S. banks report currency transactions exceeding $10,000 to FinCEN?
Answer: Bank Secrecy Act (BSA) Currency Transaction Report (CTR)
The Bank Secrecy Act requires U.S. financial institutions to file a Currency Transaction Report (CTR) with FinCEN for any cash transaction exceeding $10,000 in a single business day.