Glossary of Cash Management Terms

Cash management terminology can sometimes feel confusing. Here are some of the most common terms used in this area of banking and business financial management.

ACH – stands for Automated Clearing House, a network run by Nacha (National Automated Clearing House Association). Since the 1970s, the ACH network has electronically moved money between bank accounts across the United States. ACH transactions can help organizations improve cash flow, streamline payments, and transfer funds between accounts.

ACH Credit – funds moving through the ACH system that are pushed into an account.

ACH Debit – funds moving through the ACH system that are pulled out of an account.

ACH Positive Pay – automated cash management tool to help detect suspicious transactions, prevent fraud, and reduce financial loss. The business defines rules to monitor and manage ACH debits and credits posting to its accounts.

Business or Commercial Credit Cards – credit cards issued to employees of established companies that let them charge authorized business expense such as hotel stays and plane tickets without having to use a personal card or cash. A corporate card can help streamline expense reporting. The business can set controls for spending limits, location, type of merchant, or even specific merchants.

Cash Concentration – banking solution that allows an organization to centralize funds from multiple accounts into a single account for the potential to increase investment and/or reduce a need to borrow funds.

Cash Management – the process of managing operations or business activities, financial investments, and financing activities. Larger companies may have a department dedicated full-time to the function of cash management. Within the financial industry, cash management includes specialized services to help organizations manage and optimize cash flows.

Certificate of Deposit (CD) – time deposit account with a minimum deposit, specified maturity date, and guaranteed interest rate for the full term of the instrument. Funds are subject to penalty for early withdrawal.

Check Positive Pay – automated tool that can help prevent fraud by helping the business detect suspicious transactions and reduce financial loss. Criteria such as the account number, check number, and dollar amount of each check presented on an account are matched against a list of checks previously authorized and issued by your business.

Direct Deposit – deposit payments from a business or government to a consumer. Direct Deposits move through the ACH network and include payroll, employee expense reimbursements, government benefits, tax refunds, and interest payments.

Documentary Collections – global trade solution where the customer’s bank forwards documents and payment instructions to another financial institution on behalf of the customer.

Escrow Management Services – allows for streamlined operations of escrow accounts by maintaining one Master Account and sub-accounts for clients or tenants.

FDIC (Federal Deposit Insurance Corporation) – independent agency created by Congress to maintain stability and public confidence in the nation's financial system. To accomplish this mission, the FDIC insures deposits; examines and supervises financial institutions for safety, soundness, and consumer protection; makes large and complex financial institutions resolvable; and manages receiverships.

FDIC Insurance – protects bank depositors against the loss of their insured deposits in the event an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government. FDIC deposit insurance only covers certain deposit products, such as checking and savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs).

IOLTA Account – used by lawyers and law firms to establish interest-bearing accounts for client deposits held for a short period of time. Interest from lawyer trust accounts is pooled to provide civil legal aid to the poor and support improvements to the justice system.

Letters of Credit – a letter serving as a guarantee for payments that is issued by a bank on behalf of the customer to another financial institution, usually in a different country.

Lockbox Services – eliminates mail processing and speeds funds collection by directing customer payments to a centralized, exclusive post office box maintained on behalf of the business. A dedicated team retrieves, processes, and deposits payments that can be posted to your accounts receivable system.

Merchant Services – services and technology a business can use to accept and process credit card payments. Merchant services can include software payment gateways used for online transactions, credit card terminals for accepting in-person payments, and point of sale systems that help with a variety of tasks including sales reports, inventory tracking, loyalty programs, and more.

Money Market Checking Account – hybrid account with features of both a checking account and a savings account. A limited number of checks may be written each month, and deposited funds usually earn a higher interest rate than the rates available on a checking account or savings account. There may be monthly minimum balance requirements and maintenance fees.

Night Deposit – allows for the deposit of money outside banking hours via a Night Deposit Vault located in a bank branch office. The next business day morning, bankers make the designated deposit(s) into your account(s).

Overnight Sweep Account – links a commercial checking account with an account that earns interest. At the end of each day, balances above a target level are automatically transferred (swept) from the commercial checking account into the interest-bearing account, helping you earn money on your operating cash. If the checking account drops below its target balance, funds are automatically swept back to bring the account up to its required minimum balance.

Payee Match – works with the Check Positive Pay service to add an additional level of protection against unauthorized disbursements and fraudulent checks. Payee Match validates the payee name printed on a check against the payee name in the electronic check file provided by the business and flags any discrepancies for review.

Remote Deposit Capture – technology solution that allows a customer of a financial institution to “deposit” checks electronically from a remote location, usually the customer’s office, to the business account. Paper checks are digitally scanned and the image of the check is transmitted electronically to the customer’s bank.

Wire Transfer – a quick, effective way to move money electronically between individuals or businesses within or outside the US, in US dollars or foreign currencies. When a wire transfer is ordered, the money is withdrawn from the sender’s account immediately and generally cannot be cancelled once initiated. For this reason, it’s important to make sure you know who you are sending the money to and verify the account instructions for the receiving bank.

Zero Balance Account (ZBA) – automatically transfers funds between sub-accounts and master operating accounts to cover the exact amounts of payments clearing. Once the payments clear the account, the ZBA has a zero balance until the next transfer. This allows a business to eliminate idle account balances, maintain greater control of sub-accounts, and avoid overdrafts.

If you would like to speak to an Enterprise Bank cash management advisor about products and services to help your business increase operational efficiency and streamline cash flows, we invite you to call us at 877-671-2265.