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Ethics of Controlled Disbursement by Bank

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ETHICS PROBLEM: Controlled disbursing is defined as an information product?that is, the bank on which the company's checks are drawn provides an early-morning notification of the total dollar amount of checks that will clear the account that day. Based on that notification, the company may then fund the account for that amount by the close of business that afternoon.

How might control disbursing still be viewed as a form of "remote disbursing," and therefore be considered unethical?

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Solution Summary

The problem describes the ethics involved with controlled disbursement of banks.

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Working capital management is a practice utilized by companies to ensure that short term debts are paid while opportunity costs are minimized. In other words, the company ensures it has sufficient funds to pay bills, but does not keep hoards of cash lying around being unproductive. For example, if short term debts during the operating cycle will total $50,000 there is no sense in having $150,000 in the checking account. This is because ...

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