1. Bank Accounts 1

2. Bank Accounts Agenda Main duties of a bank Types of bank Types of Accounts Interest calculations Bank charges 2

3. Main Duties of a Bank Handle customers business in a safe and professional manner Honour customers cheques Comply with any express (written) instruction from the customer Maintain secrecy about customers affairs Give reasonable notice to close an account 3

4. Main Duties of a Bank Provide balance of account on request Receive customers money and cheques and credit to the correct account Repay money on demand in banking hours Advise customers immediately of any improper event affecting the account Exercise proper care and skill when performing all its duties. 4

5. Types of Banks Global banks - full range of services - international capability Commercial banks - wide range of services - limited international capability Investment banks - arranging, originating and distributing debt and equity issues and advice Savings banks - taking deposits and making loans 5

6. Types of Accounts Current account Deposit/savings account Composite account Money market deposit Overdraft Loan accounts Resident and Non-resident accounts 6

7. Resident Non- Resident Some countries differentiate So maybe Restrictions as to type of accounts or services available (China) Different fee structures (France) Movement of funds overseas or between R/NR maybe subject to Central Bank reporting (Germany) Prior approval may be needed for movements 7

8. Bank Accounts/Services To control Float Lockbox Intervention accounts Remote disbursement Controlled disbursement Direct collections - Negotiation - Collection 8

9. Bank Accounts So why are they important? - paying and receiving funds - safe keeping - earning interest Considerations? - cost - how many - location - who with 9

10. Table 3: Number of Banking Relationships by Region (percentage distribution) North America Western Europe 1 to 4 49% 18% 5 to 9 28% 31% 10 to 14 8% 10% 15 to 19 3% 8% More than 20 13% 33% 10

11. Working out the interest due for September Ledger Value Debits Credits Cleared Number Date Date Balance of days 30.8.06 1.9.06 700 700 Cr 7 8.9.06 8.9.06 1,500 200 600 Dr 1 9.9.06 9.9.06 500 1,100 Dr 3 10.9.06 12.9.06 100 1,000 Dr 2 14.9.06 14.9.06 250 45 1,205 Dr 7 21.9.06 21.9.06 400 1,605 Dr 10 11

12. Interest calculations 2 No credit interest Debit interest at 6% Work out the debit decimals OR 1 day @ 600 = 600 600 x.06 x 1/365 =.10 3 days @ 1,100 = 3,300 1,100 x.06 x 3/365 =.54 2 days @ 1,000 = 2,000 1,000 x.06 x 2/365 =.33 7 days @ 1,205 = 8,435 1,205 x.06 x 7/365 = 1.39 10 days @ 1,605 = 16,050 1,605 x.06 x 10/365 = 2.64 Total 30,385 4.99 Interest charge = 30,385 x.06 = 4.99 365 12

13. Bank Charges Bankers are human and need to live but…. - The Cash manager needs to control bank charges Factors affecting fees - Balances maintained - Turnover - Volume - Additional services 13

14. Bank Charges Control Understand charging method - no free services but there are hidden charges - avoid turnover charges and ad valorem - go for fixed or per item charge - identify most important items and focus on them - check interest rates used and calculations - check commission charges 14

15. Bank charges Control Review payment types and submission methods - maximise use of automated low-cost payment methods - repetitive wires cheaper than free form - straight through processing, STP. Deliver to the bank fully formatted - look for economies of scale - challenge unspecified supplementary charges - beware long commitments and index linked uplifts 15

16. Bank Charges Control Review existing arrangements - cheques paid in promptly? - more efficient way of receiving funds? - courier? - payment procedures? - put out to tender, RFI/RFP Better cash management - Netting, Pooling, Cash concentration. 16

17. METHODS OF PAYMENTS Payment Methods in Regular Use (percentage of organisations that use methods) Bank wire transfers 93% ACH credits 71% Cheques issued directly by you 59% ACH debits 50% Travel and entertainment cards 43% Single euro payments area credit transfers 42% Purchasing cards 39%

18. METHODS OF PAYMENTS Payment Methods in Regular Use Same day ACH35% Cheques issued by bank31% SEPA direct debit 20% Online payment services providers 17% Bankers drafts 15% Other local or niche products 15% Mobile payments 7% 18

19. Table 11: Payment Methods Currently Used by Region (percent of organisations using such methods) North America Western Europe ACH credits 89% 70% ACH debits 67% 49% Bank wire transfers 97% 88% Same day ACH 23% 55% Cheques issued directly by you 81% 34% Cheques issued by bank 24% 29% Bankers drafts 16% 10% Mobile payments 8% 4% 19

20. Table 11: Payment Methods Currently Used by Region (percent of organisations using such methods) North America Western Europe Online payment services providers 16% 12% Purchasing cards 67% 27% Travel and entertainment cards 63% 40% Single euro payments area credit transfers 28% 75% SEPA direct debit 19% 27% Other local or niche products 11% 25% Wire transfers are a preferred option for almost every company regardless of size 20