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Funds Concentration

Fund concentration means redirection of funds from accounts in large number of different banks or branches to a few centralized accounts at one bank. Using lockboxes is one way firms can collect checks from customers and get them into deposit banks. Another way to speed up collection is to get the cash from the deposit banks to the firm’s main bank more quickly. This is done by a method called concentration banking.

With a concentration banking system, the firm's sales offices are usually responsible for the collection and processing of customer checks.

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