Working Capital Management

Glossary

NOTE: THE TERMS EXPLAINED IN this glossary are integral to the management of working capital. Acronyms and full-word descriptions are included and are listed in order of general use (i.e., EOQ is listed first before economic order quantity, while application service provider is first listed before the acronym ASP). Other major terms are noted, but no attempt has been made to include every possible financial concept. Two excellent references on finance are QFinance and The Wiley Handbook of Finance, listed in Appendix II.

ACH (Automated Clearinghouse):

The electronic payment mechanism offered by regional organizations that performs interbank clearing of entries for participating financial institutions. ACHs are governed by operating rules and procedures developed by their participating financial institutions. ACHs make it possible for participating financial institutions to offer bill payment, direct payroll deposit, and other services. ACH payments generally move on a next-day basis.

Account analysis:

A commercial bank's invoice for services provided to corporate customers. These statements are produced monthly and contain such details as average daily book balance, average daily float, average available balances, itemized activity charges, earning credit rate (ECR), balances required to compensate for services, and balances available to support credit arrangements and other bank services.

Account maintenance:

A basic charge for a bank account, to cover the overhead ...