CPP CPP Treasury & Cash Management in Payments 2

Question 1

What is 'days sales outstanding' (DSO) and why is it relevant to payment professionals?

Accepted Answer

The average number of days it takes to collect payment after a sale, reflecting collection efficiency

Answer

DSO measures how quickly a company converts receivables into cash; payment professionals optimize DSO by accelerating collection through efficient payment acceptance and processing.

Question 2

What is a 'virtual account' in treasury and B2B payments?

Accepted Answer

A unique account number assigned to a specific payer or purpose, allowing automated reconciliation without separate physical accounts

Answer

Virtual accounts (or virtual IBANs) are unique account numbers mapped to a master account, enabling precise incoming payment identification and automated reconciliation without opening multiple bank accounts.

Question 3

What does 'prefunding' mean in the context of payment processing?

Accepted Answer

A payment processor requires the merchant or sender to deposit funds before transactions can be processed

Answer

Prefunding requires the originating party to deposit funds upfront before transactions are sent, commonly used in cross-border payments and high-risk ACH to eliminate credit risk.

Question 4

In cash management, what is a 'zero-balance account' (ZBA)?

Accepted Answer

A subsidiary account that is automatically swept to zero at end of day by transferring funds to/from a master account

Answer

A ZBA automatically sweeps its balance to zero each day, transferring excess funds up to a concentration account or drawing from it to cover disbursements, centralizing liquidity management.

Question 5

What is 'payment reconciliation' and why is it critical in payments treasury?

Accepted Answer

The process of matching transaction records across systems (POS, processor, bank) to ensure accuracy and identify discrepancies

Answer

Payment reconciliation compares transaction data from multiple sources — POS, payment processor, and bank statements — to confirm amounts match and flag errors, chargebacks, or missing settlements.

CPP - Certified Payment Professional Practice Test

CPP - Certified Payment Professional Practice Test

CPP CPP Treasury & Cash Management in Payments 2