1.

Elucidate the Importance of International Finanace in this era of globalisation

Ans: In theory, financial globalization can help developing countries to better manage output and
consumption volatility. Indeed, a variety of theories imply that the volatility of consumption
relative to that of output should decrease as the degree of financial integration increases; the
essence of global financial diversification is that a country is able to shift some of its income risk
to world markets. Since most developing countries are rather specialized in their output and
factor endowment structures, they can, in theory, obtain even bigger gains than developed
countries through international consumption risk sharingthat is, by effectively selling off a
stake in their domestic output in return for a stake in global output.
How much of the potential benefits, in terms of better management of consumption volatility, has
actually been realized? This question is particularly relevant in terms of understanding whether,
despite the output volatility experienced by developing countries that have undergone financial
crises, financial integration has protected them from consumption volatility. New research
presented in this paper paints a troubling picture. Specifically, although the volatility of output
growth has, on average, declined in the 1990s relative to the three preceding decades, the
volatility of consumption growth relative to that of income growth has, on average, increased for
the emerging market economies in the 1990s, which was precisely the period of a rapid increase
in financial globalization. In other words, as is argued in more detail later in the paper,
procyclical access to international capital markets appears to have had a perverse effect on the
relative volatility of consumption for financially integrated developing economies.
Interestingly, a more nuanced look at the data suggests the possible presence of a threshold
effect. At low levels of financial integration, an increment in the level of financial integration is
associated with an increase in the relative volatility of consumption. Once the level of financial
integration crosses a threshold, however, the association becomes negative. In other words, for
countries that are sufficiently open financially, relative consumption volatility starts to decline.
This finding is potentially consistent with the view that international financial integration can
help to promote domestic financial sector development, which, in turn, can help to moderate
domestic macroeconomic volatility. Thus far, however, these benefits of financial integration
appear to have accrued primarily to industrial countries.
In this vein, the proliferation of financial and currency crises among developing economies is
often viewed as a natural consequence of the "growing pains" associated with financial
globalization. The latter can take various forms. First, international investors have a tendency to
engage in momentum trading and herding, which can be destabilizing for developing economies.
Second, international investors may (together with domestic residents) engage in speculative
attacks on developing countries' currencies, thereby causing instability that is not warranted
based on their economic and policy fundamentals. Third, the risk of contagion presents a major
threat to otherwise healthy countries, since international investors could withdraw capital from

these countries for reasons unrelated to domestic factors. Fourth, a government, even if it is
democratically elected, may not give sufficient weight to the interest of future generations. This
becomes a problem when the interests of future and current generations diverge, causing the
government to incur excessive amounts of debt. Financial globalization, by making it easier for
governments to incur debt, might aggravate this "overborrowing" problem. These four
hypotheses are not necessarily independent and can reinforce each other.
There is some empirical support for these hypothesized effects. For example, there is evidence
that international investors do engage in more herding and momentum trading in emerging
markets than in developed countries. Recent research also suggests the presence of contagion in
international financial markets. In addition, some developing countries that open their capital
markets appear to accumulate unsustainably high levels of external debt.
To summarize, one of the theoretical benefits of financial globalization, other than enhancing
growth, is allowing developing countries to better manage macroeconomic volatility, especially
by reducing consumption volatility relative to output volatility. The evidence suggests, instead,
that countries in the early stages of financial integration have been exposed to significant risks in
terms of higher volatility of both output and consumption.
Although it is difficult to find a simple relationship between financial
globalization and growth or consumption volatility, there is some evidence of nonlinearities or
threshold effects in the relationship. Financial globalization, in combination with good
macroeconomic policies and good domestic governance, appears to be conducive to growth. For
example, countries with good human capital and governance tend to do better at attracting
foreign direct investment (FDI), which is especially conducive to growth. More specifically,
recent research shows that corruption has a strongly negative effect on FDI inflows. Similarly,
transparency of government operations, which is another dimension of good governance, has a
strong positive effect on investment inflows from international mutual funds.
The vulnerability of a developing country to the risk factors associated with financial
globalization is also not independent of the quality of macroeconomic policies and domestic
governance. For example, research has demonstrated that an overvalued exchange rate and an
overextended domestic lending boom often precede a currency crisis. In addition, lack of
transparency has been shown to be associated with more herding behavior by international
investors, which can destabilize a developing country's financial markets. Finally, evidence
shows that a high degree of corruption may affect the composition of a country's capital inflows,
thereby making it more vulnerable to the risks of speculative attacks and contagion effects.
Thus, the ability of a developing country to derive benefits from financial globalization and its
relative vulnerability to the volatility of international capital flows can be significantly affected
by the quality of both its macroeconomic framework and its institutions.

2. Who are the participants of forex market? Describe their role?

Ans: Forex Market Participants and their Roles

Consumers and Travelers

Consumers may purchase goods in a foreign country or via the internet with
their credit card.

The amount consumers pay in the foreign currency will be converted to their
home currency on their credit card statement.

Travelers must go to a bank or currency exchange bureau to convert one

currency (their "home" currency) into another (the "destination" currency)
when using cash to pay for goods and services in a foreign country.

Travelers need to be aware of exchange rates to ensure they receive a fair

deal.

Businesses

Businesses often need to convert currencies when they conduct trade outside
their home country.

Large companies need to convert huge amounts of currency; a multinational

company such as General Electric (GE) for instance, converts tens of billions
of dollars each year.

Investors and Speculators

Investors and speculators require currency exchange whenever they deal in

any foreign investment, be it equities, bonds, bank deposits, or real estate.

Investors and speculators also trade currencies in an attempt to benefit from

movements in the currency exchange markets.

Commercial and Investment Banks

Commercial and investment banks trade currencies as a service to their

commercial banking, deposit, and lending customers.

These institutions also participate in the currency market for hedging and
speculative purposes.

Governments and Central Banks

Governments and central banks trade currencies to improve economic

conditions or to intervene in an attempt to adjust economic or financial
imbalances.

Because they are non-profit, governments and central banks do not trade
with the intention of earning a profit, but because they tend to trade on a
long-term basis, it is not unusual for some trades to earn revenue.

5. What is IFRS ? State its feature and objectives.

Ans IFRS:
International Financial Reporting Standards (IFRS) is a set of accounting standards
developed by an independent, not-for-profit organization called the International Accounting
Standards Board (IASB).
The goal of IFRS is to provide a global framework for how public companies prepare and
disclose their financial statements. IFRS provides general guidance for the preparation of
financial statements, rather than setting rules for industry-specific reporting.
Having an international standard is especially important for large companies that have
subsidiaries in different countries. Adopting a single set of world-wide standards will simplify
accounting procedures by allowing a company to use one reporting language throughout. A
single standard will also provide investors and auditors with a cohesive view of finances.
Currently, over 100 countries permit or require IFRS for public companies, with more countries
expected to transition to IFRS by 2015. Proponents of IFRS as an international standard maintain
that the cost of implementing IFRS could be offset by the potential for compliance to improve
credit ratings.

IFRS is sometimes confused with IAS (International Accounting Standards), which are older
standards that IFRS has replaced.

Features of IFRS:

IFRS financial statements come in various shapes and sizes, but they all have certain features in
common. Information in IFRS financial statements has these characteristics:

Relevance: So that it makes a difference to the decisions about a company made by users
of the statements.

Faithful representation: Financial statements are complete and free from bias and error.

Comparability: You can compare financial statements from one period to the next or for
two companies in the same industry so that you can make informed decisions about the
companies.

Verifiability: Different people could reach the same decision based on the information,
but not necessarily reach complete agreement.

Timeliness: You make information available to users in good time. Historical

information quickly becomes out of date.

Understandability: You present and classify information clearly and concisely to make it
understandable to users.

The objectives of the IFRS Foundation are:

to develop, in the public interest, a single set of high quality, understandable,

enforceable and globally accepted financial reporting standards based upon
clearly articulated principles. These standards should require high quality,
transparent and comparable information in financial statements and other
financial reporting to help investors, other participants in the worlds capital
markets and other users of financial information make economic decisions
to promote the use and rigorous application of those standards
in fulfilling the above objectives, to take account of, as appropriate, the needs
of a range of sizes and types of entities in diverse economic settings

to promote and facilitate adoption of International Financial Reporting

Standards (IFRSs), being the standards and interpretations issued by the
IASB, through the convergence of national accounting standards and IFRSs.

6. Write short notes on?

a. Types of Bonds
b. ADRs
c. FCNR(B)
d. ECB
e. Important areas of International cash management.

Ans:

a. Types of Bonds
Corporate Bonds
A company can issue bonds just as it can issue stock. Large corporations have a lot of flexibility
as to how much debt they can issue: the limit is whatever the market will bear. Generally, a shortterm corporate bond has a maturity of less than five years, intermediate is five to 12 years and
long term is more than 12 years.
Corporate bonds are characterized by higher yields because there is a higher risk of a company
defaulting than a government. The upside is that they can also be the most rewarding fixedincome investments because of the risk the investor must take on. The company's credit quality is
very important: the higher the quality, the lower the interest rate the investor receives.
Variations on corporate bonds include convertible bonds, which the holder can convert into
stock, and callable bonds, which allow the company to redeem an issue prior to maturity.

Convertible Bonds
A convertible bond may be redeemed for a predetermined amount of the company's equity at
certain times during its life, usually at the discretion of the bondholder. Convertibles are
sometimes called "CVs."
Issuing convertible bonds is one way for a company to minimize negative investor interpretation
of its corporate actions. For example, if an already public company chooses to issue stock, the

market usually interprets this as a sign that the company's share price is somewhat overvalued.
To avoid this negative impression, the company may choose to issue convertible bonds, which
bondholders will likely convert to equity should the company continue to do well.
From the investor's perspective, a convertible bond has a value-added component built into it: it
is essentially a bond with a stock option hidden inside. Thus, it tends to offer a lower rate of
return in exchange for the value of the option to trade the bond into stock.
Callable Bonds
Callable bonds, also known as "redeemable bonds," can be redeemed by the issuer prior to
maturity. Usually a premium is paid to the bond owner when the bond is called.
The main cause of a call is a decline in interest rates. If interest rates have declined since a
company first issued the bonds, it will likely want to refinance this debt at a lower rate. In this
case, the company will call its current bonds and reissue new, lower-interest bonds to save
money.
Term Bonds
Term bonds are bonds from the same issue that share the same maturity dates. Term bonds that
have a call feature can be redeemed at an earlier date than the other issued bonds. A call feature,
or call provision, is an agreement that bond issuers make with buyers. This agreement is called
an "indenture," which is the schedule and the price of redemptions, plus the maturity dates.
Some corporate and municipal bonds are examples of term bonds that have 10-year call features.
This means the issuer of the bond can redeem it at a predetermined price at specific times before
the bond matures.
A term bond is the opposite of a serial bond, which has various maturity schedules at regular
intervals until the issue is retired.
Amortized Bonds
An amortized bond is a financial certificate that has been reduced in value for records on
accounting statements. An amortized bond is treated as an asset, with the discount amount being
amortized to interest expense over the life of the bond. If a bond is issued at a discount - that is,
offered for sale below its par (face value) - the discount must either be treated as an expense or
amortized as an asset.
As we discussed in Section 4, amortization is an accounting method that gradually and
systematically reduces the cost value of a limited life, intangible asset. Treating a bond as an
amortized asset is an accounting method in the handling of bonds. Amortizing allows bond
issuers to treat the bond discount as an asset until the bond's maturity. (To learn more about bond

premium amortization, read Premium Bonds: Problems And Opportunities.)

Adjustment Bonds
Issued by a corporation during a restructuring phase, an adjustment bond is given to the
bondholders of an outstanding bond issue prior to the restructuring. The debt obligation is
consolidated and transferred from the outstanding bond issue to the adjustment bond. This
process is effectively a recapitalization of the company's outstanding debt obligations, which is
accomplished by adjusting the terms (such as interest rates and lengths to maturity) to increase
the likelihood that the company will be able to meet its obligations.
If a company is near bankruptcy and requires protection from creditors (Chapter 11), it is likely
unable to make payments on its debt obligations. If this is the case, the company will be
liquidated, and the company's value will be spread among its creditors. However, creditors will
generally only receive a fraction of their original loans to the company. Creditors and the
company will work together to recapitalize debt obligations so that the company is able to meet
its obligations and continue operations, thus increasing the value that creditors will receive.
Junk Bonds
A junk bond, also known as a "high-yield bond" or "speculative bond," is a bond rated "BB" or
lower because of its high default risk. Junk bonds typically offer interest rates three to four
percentage points higher than safer government issues.
Angel Bonds
Angel bonds are investment-grade bonds that pay a lower interest rate because of the issuing
company's high credit rating. Angel bonds are the opposite of fallen angels, which are bonds that
have been given a "junk" rating and are therefore much more risky.
An investment-grade bond is rated at minimum "BBB" by S&P and Fitch, and "Baa" by
Moody's. If the company's ability to pay back the bond's principal is reduced, the bond rating
may fall below investment-grade minimums and become a fallen angel.
b. ADRs

Introduced to the financial markets in 1927, an American depositary receipt (ADR) is a stock
that trades in the United States but represents a specified number of shares in a foreign
corporation. ADRs are bought and sold on American markets just like regular stocks, and are
issued/sponsored in the U.S. by a bank or brokerage.
ADRs were introduced as a result of the complexities involved in buying shares in foreign
countries and the difficulties associated with trading at different prices and currency values. For
this reason, U.S. banks simply purchase a bulk lot of shares from the company, bundle the shares

into groups, and reissues them on either the New York Stock Exchange (NYSE), American Stock
Exchange (AMEX) or the Nasdaq. In return, the foreign company must provide detailed
financial information to the sponsor bank. The depositary bank sets the ratio of U.S. ADRs per
home-country share. This ratio can be anything less than or greater than 1. This is done because
the banks wish to price an ADR high enough to show substantial value, yet low enough to make
it affordable for individual investors. Most investors try to avoid investing in penny stocks, and
many would shy away from a company trading for 50 Russian roubles per share, which equates
to US$1.50 per share. As a result, the majority of ADRs range between $10 and $100 per share.
If, in the home country, the shares were worth considerably less, then each ADR would represent
several real shares.
There are three different types of ADR issues:

Level 1 - This is the most basic type of ADR where foreign companies either
don't qualify or don't wish to have their ADR listed on an exchange. Level 1
ADRs are found on the over-the-counter market and are an easy and
inexpensive way to gauge interest for its securities in North America. Level 1
ADRs also have the loosest requirements from the Securities and Exchange
Commission (SEC).

Level 2 - This type of ADR is listed on an exchange or quoted on Nasdaq.

Level 2 ADRs have slightly more requirements from the SEC, but they also get
higher visibility trading volume.

Level 3 - The most prestigious of the three, this is when an issuer floats a
public offering of ADRs on a U.S. exchange. Level 3 ADRs are able to raise
capital and gain substantial visibility in the U.S. financial markets.

The advantages of ADRs are twofold. For individuals, ADRs are an easy and cost-effective way
to buy shares in a foreign company. They save money by reducing administration costs and
avoiding foreign taxes on each transaction. Foreign entities like ADRs because they get more
U.S. exposure, allowing them to tap into the wealthy North American equities markets.
c. FCNR(B)

Foreign Currency Non-Resident Account Bank or FCNR (B) was first introduced in 1993. It
replaced the existing FCNR (A) scheme. This account is opened by the NRIs in 6 designated
currencies as follows:
US Dollar (USD)
Great Britain Pound (GBP)
Euro (EUR)
Japanese Yen (JPY)
Canadian Dollar (CAD)
Australian Dollar (AUD)

Please note that FCNR account is opened ONLY in the form of Term Deposits and NOT in the
form of Demand Deposits. The term is from 1 year to 5 years. Repatriation of the principal and
interest is allowed for repatriation after maturity. Interest is paid on maturity, in the same
currency of the deposit. For deposits of tenure up to one year simple interest is paid and for
deposits of tenure beyond one year the interest is compounded at half yearly rests. The maturity
proceeds inclusive of interest is fully repatriable.
The banks may decide the interest rates after approval from RBI and within the
limits fixed by RBI. If a person has NRE account and wishes to transfer to FCNR, it is
permissible without prior approval of the RBI.

d. ECB

Any money that has been borrowed from foreign sources for financing the commercial activities
in India are called External Commercial Borrowings. The Government of India permits ECBs as
a source of finance for Indian Corporates for expansion of existing capacity as well as for fresh
investment. The ECBs are defined as money borrowed from foreign resources including the
following: Commercial bank loans Buyers credit and suppliers credit Securitised instruments
such as Floating Rate Notes and Fixed Rate Bonds etc. Credit from official export credit
agencies and commercial borrowings from the private sector window of Multilateral Financial
Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc.
Objective of ECB
Government permits the ECBs as an additional source of financing for expanding the existing
capacity as well as for fresh investments. The ECB policy of the Government seeks to emphasize
the priority of investing in the infrastructure and core sectors such as Power, telecom, Railways,
Roads, Urban infrastructure etc. There is also emphasis on the need of capital for Small and
Medium scale enterprises
How ECB is different from FDI?
ECB means any kind of funding other than Equity. If the foreign money is used to finance the
Equity Capital, it would be termed as Foreign Direct Investment. The ECB should satisfy the
ECB regulations stipulated by the Government or its agencies such as RBI. The Bonds, Credit
notes, Asset Backed Securities, Mortgage Backed Securities or anything of that nature are
included in ECB. Please note that the following are not included in the ECBs: Any Investment
made towards core capital of an organization such as equity shares, convertible preference shares
or convertible debentures. We should note here that those instruments which can be converted
into equity are called convertible. The convertible instruments are covered under the FDI Policy.
Any other direct capital is not allowed in ECB.
Routes to Access ECB
External Commercial Borrowing in India can be accessed via two routes viz. Automatic Route
and Approval Route.

General idea is that ECB for investment in industrial sector, infrastructure sector are allowed
under Automatic Route. They do not require the approval of the Reserve Bank or the
Government of India. For specific sectors such as export and import, the borrower has to take the
explicit permission of the government before taking the loan.
Benefits to Borrower
For corporates, the ECB funding helps in many purposes such as paying to suppliers in other
countries etc that may not be available in India.
The cost of funds borrowed from external sources at times is cheaper than domestic funds.
The borrower can diversify the investor base.
It opens the international market for the borrowers. ECBs from internationally recognised
sources such as banks, export credit agencies, suppliers of Equipment, foreign collaborators,
foreign equity holders, international capital markets etc.
Impact & Implications on Economy
TheGovernment of India has a controlled policy on ECBs and via its policies, it would like to
make companies use the ECB to primarily fund the infrastructure and SME sector of the
economy.
The benefit for the economy is that thelow cost international funds can improve inflow of more
money in these sectors. Over the years, Indian companies have increasingly dependent on ECB.
Indian companies want to get loans through ECB at lower cost and lower their cost of borrowing.
TheExternal commercial borrowings increase the external debt of the country. That is why it has
to be matched with growth of foreign exchange reserves in the country so as to maintain
solvency.
Also increase in ECB is accompanied with increase in currency risk as there will be depreciation
in rupee, which will lead to increased burden on the borrower as the value of the rupee
depreciates. Thus, increased dependence on ECB is less favourable for borrowing countrys
view. If ECBs are not controlled , there can be huge debt causing problems for economy.
Policy of the Government
Indias ECB policy seeks to keep an annual cap or ceiling on access to ECB, consistent with
prudent debt management. The policy also seeks to give greater priority for projects in the
infrastructure and core sectors such as Power, oil Exploration, Telecom, Railways, Roads &
Bridges, Ports, Industrial Parks and Urban Infrastructure etc. and the export sector.
Allowed companies are free to raise ECB from any internationally recognised source such as
banks, export credit agencies; suppliers of equipment, foreign collaborators, foreign equityholders, international capital markets etc. offers from unrecognised sources will not be
entertained.

Current Limits
The companies in manufacturing and infrastructure sector and having foreign exchange earnings
can avail of external commercial borrowing ( ECB) for repayment of outstanding rupee loans
towards capital expenditure and/or fresh Rupee capital expenditure under the approval route. The
overall ceiling for such ECBs is $10 billion.
For infrastructure sector companies, there is an overall ceiling of $ 20 billion. RBI has in
September 2012, allowed companies to raise ECB up to a maximum period of 5 years for
importing capital goods. Under the new norms, the trade credit should not be for a period of less
than 15 months and also not in the nature of short-term roll-over finance.
e. Important ares of International Cash management
Following are the important ares of international cash management
Account reconciliation
Balancing a chequebook can be a difficult process for a very large business,
since it issues so many cheques it can take a lot of human monitoring to
understand which cheques have not cleared and therefore what the
company's true balance is. To address this, banks have developed a system
which allows companies to upload a list of all the checks that they issue on a
daily basis, so that at the end of the month the bank statement will show not
only which checks have cleared, but also which have not. More recently,
banks have used this system to prevent checks from being fraudulently
cashed if they are not on the list, a process known as positive pay.
Advanced web services
Most banks have an Internet-based system which is more advanced than the
one available to consumers. This enables managers to create and authorize
special internal logon credentials, allowing employees to send wires and
access other cash management features normally not found on the consumer
web site.
Armored car services/cash collection
Large retailers who collect a great deal of cash may have the bank pick this
cash up via an armored car company, instead of asking its employees to
deposit the cash.
Automated clearing house
Usually offered by the cash management division of a bank. The automated
clearing house is an electronic system used to transfer funds between banks.
Companies use this to pay others, especially employees (this is how direct
deposit works). Certain companies also use it to collect funds from customers
(this is generally how automatic payment plans work). This system is

criticized by some consumer advocacy groups, because under this system

banks assume that the company initiating the debit is correct until proven
otherwise.
Balance reporting
Corporate clients who actively manage their cash balances usually subscribe
to secure web-based reporting of their account and transaction information at
their lead bank. These sophisticated compilations of banking activity may
include balances in foreign currencies, as well as those at other banks. They
include information on cash positions as well as 'float' (e.g., checks in the
process of collection). Finally, they offer transaction-specific details on all
forms of payment activity, including deposits, checks, wire transfers in and
out, ACH (automated clearinghouse debits and credits), investments, etc.
Cash concentration services
Large or national chain retailers often are in areas where their primary bank
does not have branches. Therefore, they open bank accounts at various local
banks in the area. To prevent funds in these accounts from being idle and not
earning sufficient interest, many of these companies have an agreement set
with their primary bank, whereby their primary bank uses the automated
clearing house to electronically "pull" the money from these banks into a
single interest-bearing bank account. See also: Cash concentration.
Controlled disbursement
This is another product offered by banks under Cash Management Services.
The bank provides a daily report, typically early in the day, that provides the
amount of disbursements that will be charged to the customer's account. This
early knowledge of daily funds requirement allows the customer to invest any
surplus in intraday investment opportunities, typically money market
investments. This is different from delayed disbursements, where payments
are issued through a remote branch of a bank and customer is able to delay
the payment due to increased float time.
Lockboxwholesale services
Often companies (such as utilities) which receive a large number of payments
via checks in the mail have the bank set up a post office box for them, open
their mail, and deposit any checks found. This is referred to as a "lockbox"
service.
Lockboxretail services

are for companies with small numbers of payments, sometimes with detailed
requirements for processing. This might be a company like a dentist's office
or small manufacturing company.
Positive pay
Positive pay is a service whereby the company electronically shares its check
register of all written checks with the bank. The bank therefore will only pay
checks listed in that register, with exactly the same specifications as listed in
the register (amount, payee, serial number, etc.). This system dramatically
reduces check fraud.
Reverse positive pay
Reverse positive pay is similar to positive pay, but the process is reversed,
with the company, not the bank, maintaining the list of checks issued. When
checks are presented for payment and clear through the Federal Reserve
System, the Federal Reserve prepares a file of the checks' account numbers,
serial numbers, and dollar amounts and sends the file to the bank. In reverse
positive pay, the bank sends that file to the company, where the company
compares the information to its internal records. The company lets the bank
know which checks match its internal information, and the bank pays those
items. The bank then researches the checks that do not match, corrects any
misreads or encoding errors, and determines if any items are fraudulent. The
bank pays only "true" exceptions, that is, those that can be reconciled with
the company's files.
Sweep accounts
Sweep accounts are typically offered by the cash management division of a
bank. Under this system, excess funds from a company's bank accounts are
automatically moved into a money market mutual fund overnight, and then
moved back the next morning. This allows them to earn interest overnight.
This is the primary use of money market mutual funds.
Zero balance account
A Zero balance account can be thought of as somewhat of a hack. Companies
with large numbers of stores or locations can very often be confused if all
those stores are depositing into a single bank account. Traditionally, it would
be impossible to know which deposits were from which stores without seeking
to view images of those deposits. To help correct this problem, banks
developed a system where each store is given their own bank account, but all
the money deposited into the individual store accounts are automatically
moved or swept into the company's main bank account. This allows the
company to look at individual statements for each store. U.S. banks are

almost all converting their systems so that companies can tell which store
made a particular deposit, even if these deposits are all deposited into a
single account. Therefore, zero balance accounting is being used less
frequently.
Wire transfer
A wire transfer is an electronic transfer of funds. Wire transfers can be done
by a simple bank account transfer, or by a transfer of cash at a cash office.
Bank wire transfers are often the most expedient method for transferring
funds between bank accounts. A bank wire transfer is a message to the
receiving bank requesting them to effect payment in accordance with the
instructions given. The message also includes settlement instructions. The
actual wire transfer itself is virtually instantaneous, requiring no longer for
transmission than a telephone call.

In the past, other services have been offered the usefulness of which has diminished with the rise
of the Internet. For example, companies could have daily faxes of their most recent transactions
or be sent CD-ROMs of images of their cashed checks.
Cash management services can be costly but usually the cost to a company is outweighed by the
benefits: cost savings, accuracy, efficiencies, etc