Cash Management

In the United States, cash management is actually viewed as a marketing term to describe how businesses promote services to their large customers. When looking at this concept from an international perspective, one could define international cash management as the services provided in the international banking arena to support growth and development of multinationals and developing countries.

As more financial institutions begin to participate in the global economic system, process improvement has led to the reduction of communication and information costs as a result of technology. One of the focal points for many multinational corporations is to have the ability to perform financial transactions outside the United States. It is important for these corporations to have the ability to participate in the international trade process. Some of the key banking services that are needed include letters of credit, wire transfers, collections, and foreign exchange. It is important for an organization to have the ability to wire deposits in a timely manner, have the credibility for banks to provide a letter of credit on its behalf, and collect payments quickly and easily.

Technology has made it possible for financial institutions to offer electronic banking to their customers. Electronic banking, also known as electronic fund transfer (EFT), uses technology as a substitute for checks and other forms of paper transactions. Customers find the service beneficial for several reasons:

• Automated teller machines (ATMs): ATMs are electronic terminals that allow consumers to have access to their funds at any time. Financial institutions provide their customers with a card, which allows them to withdraw money from these machines as well as complete other transactions.
• Direct deposit: Many employers have mandated that employees have their payroll directly deposited into a checking or savings account. Once the funds reach the bank, the bank processes the transactions so that their customers will have access to the funds on the morning of their pay date.
• Pay-by-phone systems: A benefit to consumers is when their banks allow them to pay their bills by calling in the transactions and transferring funds between accounts.
• Personal computer banking: Given the use of technology, many consumers will base their banking selection on whether or not they can perform transactions online using their personal computers.
• Point-of-sale transfers: Consumers can use their ATM cards in many stores to purchase retail items. This process is similar to using a credit card, but the funds will come out of a checking account.
• Electronic check conversions: There are times when a consumer may write a check at a merchant's business and the transaction will become an electronic payment at the point of sale.

With the rise of electronic banking's popularity, financial institutions and consumers must be cautious and protect information that is considered private and privileged. In order to avoid a compromised situation, financial institutions must develop techniques that will assist in authenticating online banking users.