CCM Treasury Operations and Banking Relations 3

Question 1

Under the Uniform Commercial Code (UCC), what is the standard deadline by which a bank must return a dishonored check to avoid being liable for its payment?

Accepted Answer

By midnight of the banking day following receipt

Answer

Under UCC Article 4, a bank must return a dishonored check by midnight of the banking day following the day it received the item (the 'midnight deadline').

Question 2

A treasury team is evaluating whether to use a lockbox or an in-house collection process. Which factor most strongly favors choosing a bank lockbox?

Accepted Answer

Customers are geographically dispersed and mail float is significant

Answer

Lockboxes reduce mail float by intercepting payments close to customers, making them most valuable when payers are geographically dispersed.

Question 3

What is 'availability float' in the context of bank collections?

Accepted Answer

The delay between when a check is deposited and when the funds are available for use

Answer

Availability float (also called collection float) is the time between deposit and when the bank makes the funds available in the collected balance.

Question 4

A company implements a positive pay system. What risk does this primarily mitigate?

Accepted Answer

Check fraud through altered payee names or counterfeit checks

Answer

Positive pay matches checks presented for payment against the company's issued check file, flagging any checks with altered amounts, payees, or that are not on the issued list.

Question 5

In a Request for Proposal (RFP) process for banking services, what is the purpose of a 'banking needs assessment' conducted prior to issuing the RFP?

Accepted Answer

To document the company's current service volumes, fees, and requirements so banks can bid accurately

Answer

A banking needs assessment documents current service usage, transaction volumes, and requirements so that prospective banks can provide accurate and comparable bids.

(CCM) Certified Cash Manager Practice Test

(CCM) Certified Cash Manager Practice Test

CCM Treasury Operations and Banking Relations 3