Cash management services offered by various commercial ...



Cash Management Services

Cash management services offered by various commercial banks can be a useful tool for many businesses. The cash management services available at three commercial banks were examined, compared, and a judgment was made as to which bank’s service was superior to the others’ based upon a combination of features and price. Based upon these factors, the Bank was deemed to offer the most valuable service for the price paid, specifically in the context of a healthcare organization.

Cash management services offered by both commercial banks and commercial banking subunits of larger banks have become value-added banking services for many companies. The span of such services can include anything from Automated Clearing House (ACH) and wire transfer services, account reconciliation services, lockbox services, to Armored Car Services—though this list merely provides examples, as the kind of cash management services offered by any given bank may vary significantly from another, and there is a great variety of other services included in this umbrella term. For the sake of expediency, the author will assume that the reader has a level of technical proficiency adequate to understand the basic meaning of each of the services offered, and will provide greater detail primarily for services of an unusual nature.

The scope of this paper is restricted to the cash management services offered by banks Each cash management service portfolio offered by each bank has both similarities and differences to those of the other banks; however some of these services are more useful in the context of a healthcare organization than are others, and given the cost involved, these value-added services help determine which bank has the superior cash management service overall.

Some banks focusing on commercial services, and as the Company Profile portion of its webpage states, its self-described overall mission is to provide commercial banking services to generally serve businesses in Chinese communities in America and companies doing business in Greater China. The bank’s holding company has approximately $12.87 billion in assets and has 60+ branches in America and more abroad.

However, this same mission statement is not exclusionary, and it seems that its services are offered to any quality customer wishing to do business with the institution.

Cash Management Services”, the cash management services offered by the bank are: ACH services, “Cash Vault” (armored car) services, “Controlled Disbursement” services, Online Banking, Zero Balance Account, Lockbox, Wire Transfer, “Positive Pay,” and “Check Image CD-ROM” services.

The Express Deposit System would help the hospital, as well. Having cash guaranteed by the bank the day a check is scanned (and, ideally, given to the organization), is undeniably helpful. After all, increased cash reserves on a daily basis helps cover expenses, especially for accounts payable and payrolls due on a short-term basis.

The Wells Fargo Bank, offering commercial banking features but nonetheless being less devotedly a commercial bank, offers a more generic set of cash management account features. The bank offers a singular “Business Cash Management Account” (Wells Fargo Bank, 2007, para.4), which allows for the following features: an “Earnings Allowance” wherein income to the account can be used to offset fees, Lockbox services, ACH services, Account Reconciliation, “Client Analysis Statement,” Combined Billing Statement (for all accounts held with the institution), unlimited 24/7 customer help line, Online statements and check images (no guarantee as to duration of availability), “Business Spending Report,” and Overdraft Protection.

The overall usefulness of these services are, quite simply, limited. The Lockbox, ACH, and Client Analysis Statement are all useful to a hospital, however the only offering that stands out is the Client Analysis Statement. This offering is certainly valuable for a healthcare institution in terms of ability to budget and control cost, however, as has already been previously explained, if the hospital does not use many accounts with the bank the usefulness of this statement is likely very limited.

cash management services have been deemed to have equivalent costs for the services provided, determining which bank would be best for a hospital falls to which set of cash management features has the best overall advantage.

Wells Fargo’s offering can be ruled out initially, given that it offers a relatively narrow and common set of services, and those offered add a limited amount of value to a hospital. Since this matter was previously addressed in the analysis of Wells Fargo, no further explanation will be provided here.

The large variety of services offered by each of the banks, many unique compared to the other, makes judging the matter difficult. Both offer Positive Pay service, which would be very useful. Express Deposit system would be particularly advantageous, given that it would make received checks completely liquid. Then again, there is an even wider variety of services at BOW, and its SurePay, E-Commerce, DirectPay Manager, and a host of real-time services.

Using Cash Management Services to Reduce Opportunity Cost

Given that opportunity cost is generally meant as the next best forgone opportunity or opportunities in making a choice, reducing healthcare opportunity costs must be generally understood to mean reducing to costliness of various choices in terms of forgone benefits on an aggregate level. This outcome may be achieved by either lowering the costs of implementing and continuing the best solutions to a variety of problems, or by increasing the number of choices one can make to pursue solutions to new or existing problems.

In the context of cash management services, both of these possible means to lower opportunity cost can take place. Many of the discussed cash management services enable a business to engage in new activities (e.g., E-Commerce), have increased reporting on activities on a regular basis (e.g., Account Analysis service) and/or allow new ways to perform old tasks (e.g., electronic invoices). These possibilities both make new ways to perform old tasks, and create entirely new activities that a business can perform. The reporting function may be of particular interest, as it can help a hospital more effectively create budgets, even on a daily basis, and can also help identify problems as they happen, which is the first step in finding a solution to said problems. The overall effect of many of these services is reduced opportunity cost, which translates into value-added for both the organization and, by association, its employees, vendors, and customers. And, ultimately, the reduction in opportunity cost, given the mix of cash management services between competing banks, should determine which one should be chosen.

References

Bank of the West (2005-2008). Cash Management. Retrieved August 21, 2011, from Bank of the West Web site: main.jsp?ChId=a9ec15e3a4f6ef00VgnVCM10000087c35c92____

Wells Fargo (1999-2008). Business Cash Management Account. Retrieved August 21, 2011, from Wells Fargo Bank, N.A. Web site: products/accounts/checking/bcma

United Commercial Bank (2008). About UCB Company Profile. Retrieved August 21, 2011, from United Commercial Bank Web site: about-ucb/companyprofile.html

United Commercial Bank (2008). Cash Management Services. Retrieved August 21, 2011, from United Commercial Bank Web site: c_otherservices/cashmgt.html

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