Term
| Accounting Standards Codification (ASC) |
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Definition
| The detailed set of rules referred to as Generally Accepted Accounted Principles are developed, agreed upon and published in the form of ASC Codification Topics by the Financial Accounting Standards Board, an independent, self-regulating organization formed in 1973. |
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Term
| Accounts Receivable Conversion (ARC) |
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Definition
| The format used to convert eligible checks received at a lockbox into electronic debits and processed as ACH transactions. The company receiving the checks must notify the check writer that the checks will be converted. |
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Term
| Account-to-receiver transfer |
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Definition
| Under the FedGlobal ACH Payments system, this type of transfer allows funds from accounts at a U.S. depository financial institution to be retrieved by any receiver either at a participating bank location or at a trusted, third-party provider in certain receiving countries. |
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Term
| Accredited Standards Committee (ASC) X12 821 |
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Definition
| A major standardized format currently in use for the transmission of external data and used primarily by U.S. financial institutions. |
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Term
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Definition
| In a letter of credit (L/C) transaction, this is the bank that advises the seller of a L/C in its favor. |
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Term
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Definition
| The process by which an asset is purchased in one market and sold in another market to produce a riskless profit, which is not usually a treasury objective. |
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Term
| Asset-Liability Management |
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Definition
| Whenever an investment portfolio utilized borrowed funds as part of its overall strategy, the issue of asset-liability management arises. This is primarily a problem for banks and large financial institutions that fund their investments with either deposits or borrowed funds. In many cases, the problem is expressed in terms of a maturity mismatch; that is, the institution may be borrowing funds in the short-term markets (eg, by using commercial paper)while using the proceeds from the financing to purchase long-term assets. |
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Term
Automated Clearing House (ACH)
credit transaction |
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Definition
| An electronic message that instructs the originating depository financial institution to move funds from the originator's account to the receiver's account at the receiving depository financial institution. |
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Term
| Availability Anticipation |
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Definition
| This process involves the initiation of cash transfer after a deposit has been made but before the depository bank grants availability on all items. The transfer is initiated based on the projected availability. |
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Term
| Automated Clearing Settlement System (ACSS) |
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Definition
| One of tow systems in Canada used for the clearing and settlement of payments. This system clears both paper based payment items (eg, checks) and electronic items (eg, automated funds transfer debits or pre-authorized debits and credits known as direct deposits). |
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Term
| Banco de Mexico (Banxico) |
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Definition
| In Mexico, an independent body under the country's constitution that is responsible for monetary policy and is the lender of last resort for banks and a provider of treasury services to the federal government. |
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Term
| Back Office Conversion (BOC) |
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Definition
| Retailers and other entities that accept checks at the point of purchase or other manned bill payment locations can convert eligible checks to ACH debits in the back office. Explanatory signage must be present at the point of presentment, and the merchant/originator must put specific verbiage on the customer receipt indicating that the check may be converted and may clear as soon as the same day. |
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Term
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Definition
| Canada's central bank, it controls monetary policy, supplies quality bank notes (ie, currency), promotes the safety of Canada's financial system, and provides efficient and effective funds management services. |
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Term
| Bank for International Settlements (BIS) |
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Definition
| An organization that fosters international monetary and financial cooperation and serves as a bank for central banks. The BIS is also the sponsoring organization for the Basel Committee on Banking Supervision. |
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Term
| Bank capital requirements |
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Definition
| Capital requirements determine how much capital (usually defined as equity funds) the owners of a bank must contribute to the business. This is typically in the form of a ratio of capital to at-risk assets (loan and other investments). The higher the ratio of capital to assets is, the lower the risk on the part of the bank. |
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Term
| Bank Administration Institute (BAI) BAI2 format |
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Definition
| A BAI electronic reporting format used widely for reporting information about account balances, transactions, and lockbox and controlled disbursement details. |
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Term
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Definition
| This is the second set of the Basel Committee on Banking Supervision's recommendations, and focuses mainly on the creation of standards and regulations for how much capital financial institutions must put aside to reduce risks associated with investing and lending practices, as well as operational risk. At its July 2009 meeting, the Basel Committee on Banking Supervision approved a final set of measures to strengthen the regulatory capital framework for banks. |
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Term
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Definition
| A type of pooling structure that combines both sweeping and pooling. It is typically used when a company's primary bank has branches in several countries, bu the branches do not provide a full range of domestic banking services. A local bank is used to provide collection and disbursement transactions and accounts, and to sweep surplus funds to the primary bank. The primary bank (overlay bank) then notionally pools or physically transfers cash balances in overlay accounts, providing a multi-country solution. |
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Term
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Definition
| Total common stockholder's equity divided by the number of shares outstanding. |
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Term
| Bond anticipation note (BAN) |
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Definition
| A short-term, interest-bearing security issued in the anticipation of larger future bond issues. |
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Term
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Definition
| These provisions give the issuing entity the right ot call in a bond or other issue for redemption prior to the original maturity. As compensation to investors for early redemption, a call premium is generally paid when a bond is called. The call premium usually is set on a sliding scale, with larger premiums above par required the earlier an issue is called. |
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Term
| Capital asset pricing model (CAPM) |
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Definition
| The CAPM describes one possible relationship between risk and the required rate of return on an asset. In the case of common stock, the CAPM is based on the concept that a sensible investor holds a diversified portfolio of stocks to mitigate risk. |
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Term
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Definition
| An international system whereby bank authorities assign a rating to the strength of banks and other financial institutions based on six factors. CAMELS is an acronym representing the six factors: Capital adequacy, Asset quality, Management capability, Earnings, Liquidity and Sensitivity to market risk. |
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Term
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Definition
| A call option gives the contract owner the right, but not the obligation, to buy (call) the underlying asset from the contract writer at a fixed price through the delivery date. |
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Term
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Definition
| Refers to the mix of long-term debt, in the form of term loans and various types of bonds, and equity, in the form of preferred stock, common stock and retained earnings. |
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Term
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Definition
| Capital leases, also known as financial leases, have terms that are different from those of operating leases. Capital leases are essentially an alternative to borrowing the funds and purchasing the asset in question. |
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Term
| Cash conversion efficiency |
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Definition
| An efficiency/asset management ratio, this ratio measures how effectively a company has converted sales (or revenues) into cash. It is computed as cash flow from operations divided by revenues. |
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Term
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Definition
| In some foreign countries, particularly those experiencing an upsurge in economic growth, companies are assessed a capital tax on the initial capital used to establish the new venture, both on subsequent incoming capital or on repatriated capital. |
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Term
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Definition
| The time interval or delay between the day when a check is deposited by the payee and the day when the payor's account is debited. |
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Term
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Definition
| The process of converting a paper check to an electronic form other than an image exchange item. |
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Term
| Certificate of Deposit Account Registry Service (CDARS) |
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Definition
| This private service makes it possible to receive full Federal Deposit Insurance Corporation insurance coverage on amounts up to $50 million by distributing the funds among certificates of deposit issued by a participating network of banks. |
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Term
| Central bank (monetary banking authority) |
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Definition
| In a payment clearing process (in some countries), the organization that runs the clearing system, effectively linking the banks operating in that country. |
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Term
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Definition
| A committed line usually involves a formal loan agreement that specifies the terms and conditions of the credit facility. A commitment fee may be assessed based on the total amount or unused portion of the commitment. |
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Term
| Commercial Book Entry System (CBES) |
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Definition
| The CBES is a multi-tiered, automated system for purchasing, holding and transferring marketable securities. CBES exists as a delivery system that provides for the simultaneous transfer of securities against the settlement of funds. Securities owners receive interest and redemption payments wired directly to their linked accounts. |
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Term
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Definition
| This is the risk that the other party in a contract or financial transaction will not perform as promised. One component of counterparty risk is related to credit and default risk. In a generic context, however, the concept of counterparty risk extends to the risk related to any type of performance failure on the part of all counterparties with which an organization must interact. |
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Term
| Continuous Linked Settlement (CLS) |
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Definition
| A process that allows a simultaneous exchange - payment versus payment - of both sides of underlying financial transactions (ie. foreign exchange contracts, non-deliverable forward contracts and over-the-counter credit derivative contracts), which eliminates settlement risk. |
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Term
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Definition
| These are unsecured bonds that represent general claims against the issuer organization's assets and/or cash flows and may carry a higher interest cost than secured bonds. |
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Term
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Definition
| These derivative instruments allow trading partners to establish predetermined exchange rates for set periods, which effectively hedges against foreign exchange risk. Currency derivatives include options, futures and forwards contracts. |
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Term
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Definition
| This procedure generally is executed by secured creditors and comes into play when a reorganization plan fails to meet the standard for approval by all classes of creditors under the unanimous consent procedure, or when the firm is insolvent and the old equity must be eliminated. In a cram-down case, if at least one class of creditors has voted in favor of a plan, then the court may confirm the plan (or a modified version of it) as long as each dissenting class is treated fairly and equitably. |
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Term
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Definition
| A trade payment method used by companies that do not have access to sufficient hard currencies (ie, internationally traded currencies) to pay for imports from other countries. As an example, an exporter ships merchandise to the countertrading country. In exchange, it takes merchandise that may be sold elsewhere in the world. |
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Term
| Depository Institutions deregulation and Monetary Control Act of 1980 (DIDMCA) |
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Definition
| This act provided for a phaseout of interest-rate ceilings for thrift institutions and commercial banks, and allowed savings institutions to make commercial and consumer loans. It also mandated all depository institutions hold reserves at the Federal Reserve (Fed, and that the Fed price or eliminate float in the check clearing system. The act is also referred to as the Monetary Control Act. |
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Term
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Definition
| This financial management method removes debt from an organization's balance sheet without actually retiring the debt issue. In this arrangement, the borrower places sufficient funds in escrow, usually in government securities, to pay for interest and principal on the debt issue. Because control of both the debt and escrow funds is relinquished, and payment and retirement of the debt issue is now guaranteed, this debt and the related securities can be removed from the balance sheet, as well as any restrictive covenants related to the debt. |
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Term
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Definition
| This is a tax-motivated, short-term investment strategy that is also available to tax-paying corporations in the United States. A corporation may exclude 70 to 80 percent of the dividends received from stock owned in another corporation from its taxable income, as long as it owns the stock for at least 45 days. Even though dividend capture requires an equity investment, the strategy is considered a short-term investment because the stock is held only long enough to capture the dividend and qualify for the dividend exclusion. |
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Term
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Definition
| Used in the valuation of discount investments such as Treasury bills, commercial paper and banker's acceptances, it is the rate used to determine the present value or purchase price of the instrument. In calculations, the discount rate is defined as the dollar discount divided by par or maturity value, and then annualized using a 360-day year. |
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Term
| Federal Open Market committee (FOMC) |
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Definition
| This Federal Reserve committee runs the open market operations which help to implement U.S. monetary policy and control the money supply. |
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Term
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Definition
| An accounts receivable (A/R) financing process that involves the outright sale of receivables to a factor, a company that specializes in the financing and management of receivables. The factoring may be done on a with or without recourse basis. In a with recourse arrangement, the factor may return any uncollectable A/R to the seller for full credit. In a without recourse factoring arrangement, the factor takes all the risk of default on the A/R. |
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Term
| eXtensible business reporting language (XBRL) |
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Definition
| This computer-based language is an international standard for exchanging business information. it is similar to eXtensible markup language and has become a widely used standard for communicating information between business systems. |
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Term
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Definition
| These are bonds sold simultaneously in many countries outside the country of the borrower. Usually, a Eurobond is issued by an international syndicate and categorized according to the currency in which it is denominated. |
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Term
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Definition
| This concept examines the fixed costs of financing. Generally, the higher the level of debt capital used in a company, the higher the interest costs and the greater the amount of financial leverage. |
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Term
| Financial Accounting Foundation (FAF) |
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Definition
| This foundation selects members, provides funds and exercises general oversight for both the Government Accounting Standards Board and the Financial Accounting Standards Board. |
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